After Centre reduced excise duty on petrol and diesel by Rs 2 fuel to protect retail consumers from high global crude oil prices, Petroleum Minister Dharmendra Pradhan on Wednesday urged the state governments to cut Value Added Tax (VAT) on fuel by 5 per cent.
"States are the ultimate beneficiary of the tax structure. We request state governments to reduce VAT by 5 per cent keeping the consumers' interests in mind," Pradhan said.
He also said that Finance Minister Arun Jaitley will write to the chief ministers in this regard.
Also Read: Petrol price down Rs 2.5 a litre, diesel by Rs 2.25 in Delhi after excise duty cut
Earlier, the Finance ministry had ruled out slashing excise duty on petroleum products citing pressure on government finances.
"By taking cognizance of the whole scenario, the prime minister has given direction to the finance ministry and the oil ministry to look into this aspect and rightly, I don't see this as an issue of loss or gain," Pradhan told reporters.
"There is about $10 (approx. Rs 650) difference between crude oil prices and petroleum prices," Pradhan said.
Facing heat from the Opposition over fuel prices reaching a three-year high, the Centre cut the basix excise duty on petrol and diesel by Rs 2 per litre. Following the move, the finance ministry tweeted that the cut will cost the exchequer a loss of Rs 26,000 crore for the full year and Rs 13,000 crore for the remaining part of this fiscal year.
