The Rajasekhar Reddy (congress) government can cut Rs 2 per litre of petrol by cutting Value Added Tax (VAT), but has not done so despite the public outcry. West Bengal has said it would cut VAT till the impact of Wednesday’s hike is neutralised. Maharashtra has also cut taxes.
But AP — which has cut tax on aviation fuel to 4 per cent tax against 33 per cent elsewhere — has not considered cutting VAT on petro fuels. It will profit by Rs 30 crore every month following Wednesday’s price hike. It is easy for the state to forgo the tax.
“These additional revenues are unexpected and were not incorporated in the budget estimates,” a senior revenue department official said.
AP levies 33 per cent VAT on petrol, the highest in the country, and 22.25 per cent on diesel, the second highest after Gujarat. The government earned Rs 18 on every litre of petrol at the old rate of Rs 51.40.
