On the eve of Diwali, the government reduced excise duty on petrol and diesel by Rs 5 and Rs 10, respectively. At least 22 states and union territories responded by lowering their VAT rates in various degrees. Prices vary by state, based on the prevalence of local taxes and transit costs.
The drop in excise duty was the largest ever. It reverses a portion of the Rs 13 and Rs 16 per litre rise in fuel and diesel taxes enacted between March and May 2020 in order to avoid passing on to customers the dramatic drop in world oil prices at the start of the COVID-19 pandemic.
The government's decision came at a time when opposition parties and citizens were putting pressure on it to lower fuel prices. It also coincides with Assembly elections in Uttar Pradesh, Punjab, and Goa.
According to the government, the UT of Ladakh has made the largest reductions in diesel prices, resulting in a drop of 19.61 per litre, followed by Karnataka and Puducherry.
List of states that have not reduced VAT
- West Bengal
- Tamil Nadu
List of States that have cut VAT on Petrol and Diesel
|City||Petrol Slashed In Rs||Diesel Reduced In Rs|
|Madhya Pradesh||4 percent/litre||4 percent/litre|
|Himachal Pradesh||7.5 percent/litre||8 percent/litre|
|Jammu and Kashmir||7/litre||7/litre|