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Excise duty slashed, Centre now asks states to reduce tax on petrol, diesel prices

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A day after slashing excise duty on petrol and diesel prices by Rs 2 per litre, Petroleum Minister Dharmendra Pradhan plans to write to all state chief ministers to cut tax on fuel.

A day after slashing the excise duty on petrol and diesel by Rs 2 per litre, the central government has now asked the states to reduce the value-added tax (VAT) on fuel in order to provide further relief to consumers.Â

Sources in the government said Petroleum Minister Dharmendra Pradhan will write to all state chief ministers to cut tax on fuel. The states charge anywhere between 25 to 49 per cent VAT on diesel and petrol .

WHAT WE KNOW SO FAR:
  1. On Tuesday, after facing all-round criticism on fuel prices, the government slashed the excise duty on petrol and diesel by Rs 2 per litre. The new prices were effective from today.
  2. According to the government, the decision to reduce the “Basic Excise Duty” rate on petrol and diesel has been taken to cushion the impact of rise in international crude prices.
  3. The decision to cut excise will cost the exchequer Rs 13,000 crore during the remaining part of the fiscal and Rs 26,000 crore for the full year.
  4. The three state-owned oil marketing companies (OMCs) — Indian Oil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation — revise prices of petrol and diesel on a daily basis and these are announced at 6 a.m.