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13 Oct 2017

MP cuts diesel VAT by 5%, petrol VAT by 3%

The MP government has cut the value added tax (VAT) on fuel products. It reduced VAT on diesel by 5% and VAT on petrol by 3%. CM Shivraj Chouhan said the new prices will be effective from midnight.

The move came after Oil Minister Dharmendra Pradhan urged state governments to reduce the tax burden on consumers.

Find out more details below.

In context

Now, MP reduces VAT on fuel products


Centre takes the initiative to relieve consumers

The Centre recently cut excise duty on diesel and petrol by Rs. 2 per litre. The government was facing pressure from people as fuel prices were being kept high while global prices remained low.

Subsequently, Pradhan asked every state, which has different VAT rates on fuel, to reduce 5% VAT for the benefit of consumers. He also said that some states levy 24-26% VAT on fuel.


Following Centre's directive, many states followed

After the Centre gave this directive, Maharashtra reduced petrol and diesel prices by Rs. 2 and Rs. 1, respectively.

Gujarat reduced VAT by 4%, Uttarakhand by 2% and Himachal by 1%. MP is the fifth state to reduce VAT on petroleum products.

Delhi and Kerala which were at the forefront for demanding a cut in duties might be the next.

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Will fuel be included under GST?


Will fuel be included under GST?

As some states showed a coordinated response to the Centre's directive of reducing VAT on petroleum products, it raised expectations that these products might soon be included under the goods and services tax (GST) ambit.

However, the Mint reports that the GST council has discussed no such proposal.

Pradhan, who supports the inclusion, asserted that such a decision will be taken by centre-state consensus.

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