Odishatv Bureau

Bhubaneswar/New Delhi: In an attempt to provide relief to consumers, the Centre now wants states to cut sales tax or VAT on petrol and diesel by 5 per cent.

Oil Minister Dharmendra Pradhan said Finance Minister Arun Jaitley will soon write to all state chief ministers urging them to cut VAT on petrol and diesel.

"We have proactively cut excise duty by Rs 2 per litre, sacrificing Rs 26,000 crore in revenue. Now it's the turn of states to reduce VAT," he said.

Unlike the Centre, states levy VAT as an ad valorem duty which rises every time there is an increase in price.

"States are the biggest beneficiary. They get all of the VAT collection plus they also get 42 per cent of the central excise collections. The amount remaining with the Centre is used to finance centrally sponsored schemes in states," Pradhan said.

Also Read: Petrol, Diesel To Get Cheaper As Centre Slashes Excise Duty

"States impose VAT ranging from 26 per cent to 38 per cent. I urge all states to reduce VAT by 5 per cent in line with the cut in central excise duty to provide farmers and consumers with one more slab of relief," the union minister added.

On Tuesday, the Narendra Modi-led BJP government reduced excise duty on petrol to Rs 19.48 per litre from Rs 21.48 per litre and on diesel to Rs 15.33 a litre from Rs 17.33 previously.

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