Chief Minister Naveen Patnaik on Thursday announced reduction of VAT of Rs 3 on petrol and diesel. The announcement came a day after the Central Government reduced excise duty on petrol and diesel by Rs 5 and Rs 10, respectively.
The new rates of petrol and diesel would come into effect from Friday midnight.
In view of this reduction, the loss of VAT revenue to the State exchequer would be to the tune of Rs 1,400 crore per annum.
This is in addition to loss in VAT collection @ Rs 1.6per litre on petrol and Rs 2.8 per litre on diesel, total amounting to Rs 700 crore, which the State is likely to incur in view of Excise Duty reduction by the Central Government.
Hence, the total loss to the State exchequer on account of reduction in VAT is approximately Rs 2,000 crore. However, it would provide a major relief to the people of Odisha.
With the decision, petrol and diesel prices in the State are likely to be one of the lowest in the country.
A day after the Central Government reduced Excise Duty on petrol and diesel, price of the fuels dipped in the State.Petrol was being sold at Rs 104.73 per litre in Bhubaneswar; similarly, the rate was Rs 105.51 in Cuttack.
Petrol prices had crossed Rs 110-mark in all districts of the State, a couple of days ago.
The Centre on Wednesday announced slashing of Excise Duty cut on both petrol and diesel, thus bringing down retail price.
