State govt not likely to cut VAT on petrol, diesel

Even as people fume over the record hike in petrol and diesel prices, the Gujarat government on Wednesday indicated that it has no immediate plans to reduce the Value Added tax (VAT) on petrol and diesel, claiming that such tax revenue is the key source of income.

Maitry Patel, MBA student and resident of Subhash Bridge area said, "I am studying in final year at LJ College, Sarkhej, and interning with a private company. I spend Rs 500 every three days on petrol which is a direct increase of Rs 100 as I spent Rs 400 earlier. My monthly budget is seriously affected by the price rise."

However, talking to reporters here on Wednesday, Deputy Chief Minister Nitin Patel said that the state government had already provided a relief to the people by reducing VAT on fuel last year. "Fuel prices change as per the international crude prices. There are many states where VAT is higher than what it is in Gujarat today. VAT on fuel is the main source of income for us," Patel said in response to a query.

Presently, the state government charges 20 per cent VAT and 4 per cent cess on both petrol and diesel.

"Gujarat is the only state which had reduced VAT some time back to give relief to the citizens. Though VAT on fuel in many states is higher than Gujarat, these states have not reduced this tax like we had done," Patel, who also handles Finance portfolio, said.

He added that although the prices are increasing, the use of petrol and diesel is not decreasing.

Putting the onus on the Centre, he said, "Let's hope that something fruitful in this regard transpires in today's meeting between Union Petroleum minister Dharmendra Pradhan and oil companies". In October last year, the state government had reduced the VAT on petrol and diesel by 4 per cent. Prior to that, the state government used to charge 24 per cent VAT on fuel. AM