In a bid to minimise the impact of recent fuel price hike on consumers, the Maharashtra government on Wednesday reduced Value Added Tax (VAT) on diesel and kerosene by two per cent.Chief Minister Prithviraj Chavan told reporters here after the cabinet meeting that the new rates of VAT on diesel in Mumbai, Thane and Navi Mumbai would come down to 24 per cent from the existing 26 per cent.
While in rest of the state, the VAT rate will decrease from 23 to 21 per cent. Chavan said VAT would now be three per cent instead of five per cent on Kerosene in PDS.
He said the state government will have to bear a burden of atleast Rs 1400 crore (Rs 14 billion) following the decision to reduce VAT.
The loss to state exchequer would be nearly Rs 500 crore due to the decrease in VAT rate. Similarly, the Centre has reduced excise and custom taxes which will amount to losses of atleast Rs 49,000 crore (Rs 490 billion).
"This will impact Maharashtra's share in the central allocation of funds for development works," Chavan said adding that the total loss would be atleast Rs 1400 crore.
The Chief Minister said steps would be taken to ensure that the state budget does not go into revenue deficit and development works are are not affected.
As per the revised VAT rates, diesel rates would come down by 72 paise and kerosene by 28 paise per litre.
