Petrol, Diesel Gets Cheaper In Rajasthan After State Cuts VAT By 2%

On Friday, the Rajasthan government announced a reduction in the Value-added tax (VAT) on diesel and petrol by 2% each. After the revision, 36% VAT will be applicable on petrol and 26% on diesel in the state.

While fuel rates in India are determined by changes in international crude oil prices and forex rates, central, state and local taxes form a major part of the retail price that consumers pay.

Announcing the development, Rajasthan Chief Minister Ashok Gehlot urged the Central government for a reduction in VAT.

"The State govt has reduced VAT by 2% both on petrol & diesel to provide relief to people in #Rajasthan. We expect the central govt would announce a reduction too so that financial burden on common people is reduced," Gehlot tweeted.

The announcement comes after the recent and consistent hike in fuel rates caused branded or premium petrol price to cross the Rs 100-mark in Sriganganagar town of Rajasthan.

For the last three days, petrol is being sold at Rs 93.94 per litre and diesel at Rs 86.02 per litre in Jaipur. Rates have now been reduced to Rs 92.51 per litre for petrol and Rs 84.62 for diesel.

As for other major cities in India, petrol price per litre on Friday was priced at Rs 86.30 in New Delhi, Rs 87.69 in Kolkata, Rs 92.86 in Mumbai and Rs 88.82 in Chennai.

Diesel rates per litre were priced at Rs 76.48 in New Delhi, Rs 80.08 in Kolkata, Rs 83.30 in Mumbai and Rs 81.71 in Chennai.

Petrol and diesel do not come under the purview of goods and services tax (GST). Other factors in the retail price of petrol and diesel include excise duty and VAT, which is levied by the state government.

Oil companies such as state-run Indian Oil Corporation - the country's largest fuel retailer - review the rates of petrol and diesel on a daily basis, to align them with global oil prices. Any revisions are implemented at fuel pumps with effect from 6 am every day.