Ending all the speculations over the drop in fuel prices after the Odisha government announced a 4% reduction of Value Added Tax (VAT) each on the prices of petrol and diesel, on Thursday, the State government has published a circular stating the revised VAT and price slashed on the fuels on Friday.
As per reports, each litre of petrol and diesel will now cost Rs 3.04 and Rs 2.86 cheaper, respectively in the State following revision of the VAT.
The State government will now charge 28% VAT on petrol and 24% on diesel instead of 32% and 28% tax respectively.
The revised price with the slashed VAT will come into force from November 6, the Finance Department mentioned in a notification.
Earlier today, uncertainty was looming over the announced VAT reduction by the State government. As claimed before, overall, each litre of the fuel would reduce by Rs 3. However, questions were raised, how a slash of 4% VAT on the fuels will bring down the price of a litre fuel by Rs 3.
On Thursday, Sanjay Lath, General Secretary, Utkal Petroleum Dealers Association had said that considering the percentage reduction on VAT, the reduction of prices may be less than Rs 3 or higher than it.
The Odisha government's announcement reduction of VAT came a day after the Centre reduced excise duty on the fuel prices. The government has claimed that it is likely to see its taxes cut down by 2000 crore due to the revision in the VAT.
As stated by the Odisha government, 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.
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. So the VAT revision by the State government will further drop the fuel prices. As estimated, the petrol price may come down to Rs 101.84 and diesel Rs 91.65 paise in Bhubaneswar.