Gujarat Govt Cuts VAT On LPG, Cuts Levy On Petrol, Diesel - June 11, 2008

The Gujarat Government on June 10, declared reduction of VAT on diesel and petrol by 3 per cent each and abolished the total VAT of 4 per cent on domestic LPG, thus bringing down prices of these products by Re 1 and Rs 1.38 per litre, respectively, and Rs 13.05 a gas cylinder. Due to these measures, the total affect of revenue loss to the State Government will be Rs 1,450 crore. With the Union Government declaring a price increase recently, the diesel prices had increased by Rs 3.55 in Gujarat. The retail price of diesel in the State will now be down by Re 1/litre. The petrol price had increased by Rs 5.49, which will now be down by Rs.1.38/litre.

The State Government hopes the oil marketing companies of the Centre to pass on this benefit to the consumers with immediate effect. The loss on this account to Gujarat will be Rs 50 crore. Apart from this, the additional burden on the State Government, as a consumer in terms of increased expenditure in development works, comes to Rs 455 crore. Thus, the total affect of the price increase of petroleum products by the Centre and relief given by the State Government, the impact on the exchequer will be to the extent of Rs 1,450 crore, whereas the total impact of price rise on the State''s people would be nearly Rs 3,000 crore.

Sales Tax Cut On Fuel - June 6, 2008

Four states played good samaritan to people suffering from a hike in fuel prices by slashing taxes that made petroleum products a tad cheaper, even as the Prime Minister asked his colleagues to avoid foreign travel and cut back on spending.Delhi, Bihar and Tamil Nadu today followed West Bengal''s example and announced cut in sales tax on fuel sales to cushion the impact of yesterday''s steep price hike on users.

Congress President Sonia Gandhi and the BJP also separately asked chief ministers of states ruled by their respective parties to cut sales tax on petroleum products.Petrol and diesel prices were yesterday hiked by Rs 5 and 3 a litre, respectively, and cooking gas by Rs 50 a cylinder, a decision that was marked by protests and shutdown in Left- ruled states of West Bengal, Kerala and Tripura today.Prime Minister Manmohan Singh, who appealed to states to forego a part of their revenues from petro products, today wrote to his colleagues, asking them to take austerity steps.

The appeal was followed by cut in sales tax on LPG by the Congress-ruled Delhi government, on diesel by DMK-ruled Tamil Nadu and on petrol and diesel by the NDA government in Bihar. The Left-ruled West Bengal government has already slashed sales tax on petrol and diesel by up to five per cent giving a relief of Rs 2.12 and Rs 1.38 a litre on the two fuels respectively. Uttar Pradesh Chief Minister Mayawati threatened to launch an agitation against the price hike, saying tax cut by states was not a permanent solution.