The Kerala government on Saturday, May 21, announced a cut in tax on the prices of petrol and diesel by Rs 2.41 and Rs 1.36 per litre respectively, following reduction of fuel price by the Union government. Announcing the cut on state tax, Kerala Finance Minister KN Balagopal said the Union government has partially reduced the huge tax imposed by it. He, however, welcomed the Union government’s decision.
"The Union government has partially reduced the huge tax on petrol and diesel. Kerala government welcomes this decision," Balagopal said in a statement. "...state government will reduce state tax on the price of petrol and diesel by Rs 2.41 and Rs 1.36 per litre respectively," he said.
However, it should be noted that the sales tax is charged as a percentage of a total, and the VAT levied by a state is not a fixed value unlike the excise duty. It is a charged as a percentage of the sum of the price charged to dealers, the excise duty and the dealer commission. Since the excise duty was reduced by the Union government, the VAT levied by the state goes down proportionally. However, the VAT percentage by the state continues to remain the same -- 30.80% on petrol and 22.7% on diesel. In addition, Kerala collects an additional sales tax of Rs 1 per litre on both fuels as well as 1% fuel cess.
Petrol price on Sunday, May 22, was slashed by Rs 8.69 a litre and that of diesel by Rs 7.05 per litre by oil marketing companies following the Union government's decision to cut excise duty on auto fuels, giving relief to consumers battered by high fuel prices that had pushed inflation to a record high. The government had on Saturday announced a Rs 8 per litre cut in excise duty on petrol and Rs 6 reduction on diesel.
Rates differ from state to state depending on incidence of local taxes such as VAT.
Petrol now costs Rs 106.03 a litre in Kolkata (earlier Rs 115.12) and Rs 102.63 in Chennai (previously Rs 110.85). Diesel is priced at Rs 92.76 a litre in Kolkata (previously Rs 99.83) and Rs 94.24 in Chennai (earlier Rs 100.94).
The excise duty cut will translate into a reduction of Rs 8.69 a litre on petrol in Delhi and Rs 7.05 in diesel per litre after taking into account its impact on other levies. Petrol in the national capital now costs Rs 96.72 a litre as against Rs 105.41 previously. Diesel is now priced at Rs 89.62 per litre as opposed to Rs 96.67 earlier, a price notification from state-owned fuel retailers showed.
In Mumbai, petrol rates have been slashed to Rs 111.35 a litre from Rs 120.51 while diesel rates have come down to Rs 97.28 per litre from Rs 104.77.