Petrol price has been further reduced by as much as ₹8.7 per litre and diesel by ₹9.52 in BJP ruled states and UTs – from Ladakh to Puducherry – as they matched the central government’s announcement of a cut in excise duty with slashing of local sales tax (VAT) rates.
Buckling under pressure, the Centre had on Wednesday cut excise duty on petrol by ₹5 per litre and that on diesel by ₹10 a litre to give reprieve to consumers battered by record-high retail fuel prices.
This announcement was matched by 22 States and Union Territories cutting VAT rates in different proportions.
This has led to BJP and its partner ruled States witnessing steeper reductions in petrol and diesel prices in comparison to Maharashtra, Delhi, West Bengal and other States that are governed by other political parties, according to a price chart of different locations prepared by state-owned oil firms.
The additional reduction, on top of the excise duty cut, is the lowest in Uttarakhand because of lower duty cuts and the highest in UT of Ladakh. On petrol, the price reduction over-and-above excise reduction ranges from ₹1.97 per litre in the case of Uttarakhand to ₹8.70 in the case of UT of Ladakh.
For diesel, the additional reduction warranted by VAT cuts, ranging from ₹17.5 a litre in Uttarakhand to ₹9.52 in the case of Ladakh.
The States and UTs that extended additional VAT benefits are Karnataka, Puducherry, Mizoram, Arunachal Pradesh, Manipur, Nagaland, Tripura, Assam, Sikkim, Bihar, Madhya Pradesh, Goa, Gujarat, Dadra & Nagar Haveli, Daman & Diu, Chandigarh, Haryana, Himachal Pradesh, Jammu & Kashmir, Uttarakhand, Uttar Pradesh and Ladakh.
Karnataka saw ₹8.62 a litre cut in petrol price due to VAT reduction and ₹9.40 in diesel rates, while Madhya Pradesh gave its citizens an additional ₹6.89 price relief on petrol and ₹6.96 on diesel. Uttar Pradesh lowered VAT on petrol by ₹6.96 and diesel by ₹2.04 a litre.
States that have so far not lowered VAT include Congress and its allies ruled Rajasthan, Punjab, Chhattisgarh, Maharashtra, Jharkhand and Tamil Nadu. AAP-ruled Delhi, TMC-governed West Bengal, Left-ruled Kerala, BJD-governed Odisha, TRS-led Telengana and YSR Congress-ruled Andhra Pradesh.
Wednesday’s excise duty cut had translated into a reduction in the price of petrol in the range of ₹5.7 to ₹6.35 per litre across the country and diesel rates by ₹11.16 to ₹12.88.
Since States charge local sales tax or VAT not just on the base price but also on the excise duty levied by the Centre, the total incidence of price reduction was higher than ₹5 a litre cut in excise duty on petrol and ₹10 per litre cut in diesel. The reduction was larger in States with higher VAT.
In Delhi, the reduction in petrol price was ₹6.07 per litre, and that on diesel was ₹11.75, according to the price chart.
After duty changes, the costliest petrol is sold in Rajasthan at ₹111.10 per litre (Jaipur), followed by Mumbai ( ₹109.98) and Andhra Pradesh ( ₹109.05). The fuel is below ₹100-a-litre-mark in most BJP ruled states baring Karnataka ( ₹100.58), Bihar ( ₹105.90), Madhya Pradesh ( ₹107.23) and Ladakh ( ₹102.99).
Similarly, the costliest diesel is now sold in Rajasthan at ₹95.71 a litre (Jaipur), followed by Andhra Pradesh ( ₹95.18) and Mumbai ( ₹94.14).
The cheapest diesel is in Mizoram at ₹79.55 a litre.
` Petrol costs ₹103.97 per litre in Delhi, and diesel is sold for ₹86.67 per litre.
VAT rates differ from state to state, leading to differential rates of fuel.
The excise duty cut announced on Wednesday night was the highest-ever reduction in excise duty. It rolls back a part of the ₹13 and ₹16 per litre increase in taxes on petrol and diesel effected between March 2020 and May 2020 to avoid passing on to consumers the sharp fall in international oil prices at the onset of the COVID-19 pandemic.
Based on April to October consumption numbers, the loss of revenue to the government due to the excise duty cut will be ₹8,700 crore per month. This totals to an annual impact of over ₹1 lakh crore, industry sources said. For the remainder of the current fiscal, the impact would be ₹43,500 crore.