In a relief for vehicle-owners and other sectors, the Shinde-Fadnavis government has announced that petrol and diesel will be cheaper by Rs 5 and Rs 3/ litre respectively, from midnight on Thursday. The Shinde-Fadnavis government has reduced additional cess on petrol to Rs 5.12/ litre from the existing Rs 10.12/ litre and while that on diesel will be zero, from the existing Rs 3/ litre. However, the government has not reduced the 26 per cent VAT on petrol in Mumbai, Thane, Navi Mumbai and Aurangabad but it is the additional cess that has been lowered to Rs 5.12/ litre, from the existing Rs 10.12 per litre. In the rest of Maharashtra, the VAT on petrol will be 25 per cent plus additional cess of Rs 5.12/ litre.
In the case of diesel, VAT at 24 per cent/ litre will continue but the additional cess will drop down to zero from the present Rs 3/ litre in Mumbai, Thane, Navi Mumbai and Aurangabad. However, in the rest of Maharashtra, the VAT on diesel will be 21 per cent with zero additional cess.
Chief Minister Eknath Shinde, who chaired the cabinet meeting, announced the reduction in the additional cess on auto fuel, scheduled to come into effect from Thursday midnight. In Mumbai, this would bring down petrol prices to Rs 106.23, from Rs 111.35/ litre and diesel to Rs 94.28, from Rs 97.28/ litre.
Shinde, accompanied by his deputy, Devendra Fadnavis, said that as a result of the cut in cess, the state government would incur a revenue loss of Rs 6,000 crore annually. However, he clarified that the Shiv Sena-BJP government would not cut expenditure on development and welfare programmes despite this anticipated revenue loss.
Hours after Shinde’s announcement, the finance department deputy secretary, Mandar Kelkar, issued the gazette notification. As reported by The Free Press Journal on July 6, 38 lakh kilolitres of petrol and 108 lakh kilolitres of diesel are sold annually in Maharashtra.
“The Central government had reduced VAT on November 4 and May 22 and PM Narendra Modi had also urged states to do so. However, the previous Maha Vikas Aghadi government did not pay heed to the Centre’s request. We studied the financial situation and decided to reduce the VAT on petrol and diesel. As a result, petrol will be cheaper by Rs 5 per litre and diesel by Rs 3 per litre. This will lead to a financial burden of Rs 6,000 crore on the state,” said Shinde after the cabinet meeting.
Fadnavis tweeted, “Great relief to Maharashtrian & Marathi Manus. Happy to announce that new Government under CM Eknath Shinde has decided to reduce Petrol & Diesel prices by Rs 5/litre & Rs 3/litre respectively.” Further, he claimed that the MVA had not reduced VAT in May but the reduction in price as claimed by the previous state government was a natural result of the Centre’s decision to cut down excise duty on fuel.
The president of the Federation of All Maharashtra Petrol Dealers Association, Uday Lodh, told The Free Press Journal, “Today’s cabinet decision will benefit consumers as they will get petrol and diesel at reduced prices. Dealers too will benefit as they have to pay less for the procurement of petrol and diesel. However, the decision should have come into effect after two days, as it would have helped dealers who have already spent money on purchase auto fuel with stock lying at the pumps.” However, “because of this reduction, vehicles reaching Maharashtra from the borders of Gujarat, MP, Telangana and Chhattisgarh will get cheap fuel, so the state’s fuel sales will go up in the border districts but vehicles from Karnataka and Goa will not get a similar benefit,” he explained.
However, according to the adviser of the president of the Petrol Dealers’ Association, Ravi Shinde, “Ideally, VAT reduction should have been announced in percentage, rather than in rupees. This creates confusion.”
In the annual budget presented by the former deputy chief minister and finance minister Ajit Pawar in March, the previous Maha Vikas Aghadi government had estimated sales tax/ VAT collection on petrol, diesel, ATF and ethanol at Rs 50,200 crore for 2022-23, as against Rs 45,000 crore in 2021-22. The Maha Vikas Aghadi government had, on May 22, reduced VAT by Rs 2.08 and Rs 1.44 per litre on petrol and diesel respectively, saying that it had done whatever was possible.
Maharashtra’s excise collection on diesel in 2017-18 was Rs 33,479 crore, Rs 35,282 crore in 2018-19, Rs 37,349 crore in 2019-20 and Rs 30,432 crore in 2020-21. However, in return, the state received Rs 427 crore in 2017-18, Rs 440 crore in 2018-19, Rs 435 crore in 2019-20 and Rs 383 crore in 2020-21 from the Centre.
Similarly, Maharashtra’s excise collection on petrol was Rs 14,920 crore in 2017-18, of which the state received Rs 129 crore, Rs 139 crore of Rs 15,643 crore in 2018-19, Rs 147 crore of Rs 16,134 crore in 2019-20 and Rs 138 crore of Rs 14,032 crore in 2020-21.
