After Centre’s excise duty cut, Odisha reduces VAT on petrol, diesel
BHUBANESWAR: With the Centre slashing excise duty on petrol and diesel, chief minister Naveen Patnaik on Thursday announced reduction of VAT on fuel by Rs 3 per litre, which will be effective from November 5 midnight.
Odisha is the first non-BJP ruled state to have reduced VAT on petrol and diesel.
An official statement issued by the chief minister’s office said that the reduction of VAT is over and above the reduction of excise duty announced by the central government.
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Taking a cue, the governments of UP, Gujarat, Goa, Karnataka, Uttarakhand, Assam, Manipur, Tripura and Bihar cut VAT on fuel. BJP governs all these states, except Bihar where it is in alliance with JD(U). UP, Goa, Uttarakhand, Gujarat and Manipur are going to polls next year.
“The decision to reduce VAT on petrol and diesel has been taken to provide relief to the public from rising fuel prices. The fuel prices in Odisha will be one of the lowest in the country,” the statement said.
In view of this reduction, the loss of VAT revenue to state exchequer will be to the tune of Rs 1,400 crore per annum. This is in addition to loss in VAT collection of Rs 1.6 litre on petrol and Rs 2.8 litre on diesel, total amounting to Rs 700 crore, which the state is likely to incur in view of excise duty reduction by the Centre. Hence, the total loss to state exchequer on account of reduction in VAT is approximately Rs 2,000 crore.
With the decision to reduce VAT on fuel, Odisha joined states like Assam, Goa, Gujarat, Tripura, Manipur, Delhi, Karnataka, Uttar Pradesh and Haryana.
The state government in May last year had hiked VAT on petrol from 26% to 32% and on diesel from 26% to 28% with an aim to increase state’s revenue base in view of the Covid-19 pandemic.
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