Maharashtra won't cut petrol and diesel VAT despite Center request
Maharashtra isn't planning to lower its VAT on petrol and diesel, even after the Center asked, because the state's finances are stretched thin.
With a revenue deficit over ₹40,500 crore and debt topping ₹11 lakh crore for FY 2026-27, Maharashtra leans heavily on fuel taxes, which bring in more than ₹65,000 crore each year (about 13% of its total tax revenue).
High fuel taxes preserve Maharashtra spending
Maharashtra charges a 25% VAT plus a ₹5.12 per liter cess on petrol, making it one of India's most expensive states for fuel.
Officials say lowering these taxes would hit essential spending like the ₹35,000 crore farm loan waiver and schemes like Ladki Bahin (₹29,800 crore a year).
While they recently cut VAT on aviation fuel, they're not keen to do the same for petrol or diesel because it would leave an even bigger hole in their budget.