Maharashtra cuts VAT on petrol, diesel; calls it 'Diwali gift'

In a bid to provide succour to people ahead of Diwali festivities, the Maharashtra government on Tuesday decided to reduce value-added tax (VAT).

Thus, petrol would be cheaper by Rs 2 and diesel by Rs 1 across Maharashtra, which became the second state after Gujarat to reduce VAT on the two petroleum products.

"It is a Diwali gift to the people of Maharashtra," finance, planning and forest minister Sudhir Mungantiwar said after the weekly Cabinet meeting presided over by chief minister Devendra Fadnavis.

The new rates came into force from midnight.

It may be recalled, union finance minister Arun Jaitley has told state governments to consider reducing state-level taxes on petrol and diesel products which increase the prices at local levels.

"The decision to reduce VAT will cause an annual revenue loss of Rs 3,000 crore to the state exchequer.We are ready to bear the additional financial burden despite Maharashtra’s economy not being in a good shape,” Mungantiwar said.