A day after the Centre reduced excise duty on both petrol and diesel, Odisha government today announced a further reduction of Rs 3 per litre on Value Added Tax (VAT) on the fuel.
The new orders, as announced by Chief Minister Naveen Patnaik on Thursday, will be applicable from midnight of November 5.
The announcement has come as a big relief for the fuel consumers in the State who were feeling the pinch of the unabated rise in the prices in the last couple of months.
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Now, after the Centre’s reduction in Excise duty and the State’s reduction in VAT, the Odisha government is likely to incur a loss of around Rs 2000 crore.
"In view of this reduction, the loss of VAT revenue to state exchequer will be to the tune of Rs 1400 Cr. per annum. This is in addition to the loss in VAT collection @ Rs. 1.6/ litre on petrol and Rs. 2.8/ litre on diesel, total amounting to Rs 700 Cr., which the state is likely to incur in view of Excise duty reduction by the Government of India. Hence the total loss to the State exchequer on account of reduction in VAT is approximately Rs. 2000 Cr. but is going as a major relief to the people of Odisha,” the State government's order read.
Following the Centre's announcement to cut excise duty on petrol by Rs 5 and on diesel by Rs 10, retail prices of petrol and diesel fell between Rs 5-10 per litre on Thursday. The move was in view of containing surging rates.
Meanwhile, the cut was larger in some states such as Uttar Pradesh and Goa following the Centre's announcement as they announced VAT cut on the fuels.