The Eknath Shinde-led Maharashtra government slashed the value-added tax (VAT) on petrol and diesel on Thursday. The chief minister has asked to reduce the (VAT) on petrol by Rs 5 and on diesel by Rs 3 per litre respectively.
With this cut, petrol is likely to cost around Rs 106 a litre and diesel Rs 94 per litre in Mumbai.
Before the reduction in VAT, petrol prices in Mumbai were at Rs 111.35 per litre, while a litre of diesel used to cost Rs Rs 97.28/litre.
Chief Minister Eknath Shinde said the cut in Value Added Tax will cost the state Rs 6,000 crore a year, but it is likely to bring down overall inflation.
The decision comes after Shinde had last week said that VAT on fuel would be reduced.
Deputy Chief Minister Devendra Fadnavis said the decision is "part of the Shiv Sena-BJP government's commitment to people's welfare".
On May 22, the central government cut the central excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre to bring down fuel prices in the country. The announcement, made by finance minister Nirmala Sitharaman on Twitter, came in the backdrop of spiralling inflation in the country which has triggered a rise in the prices of essentials
Since fuel prices tend to have a direct impact on retail goods, a reduction in excise duty is expected to tame the prices of essential commodities.
India's fuel consumption jumped 23.8% in May from a year earlier, continuing a recovery from a relatively low base in 2021 when the world's third-biggest oil consumer was in the grip of the second wave of Covid-19.