Gujarat Chief Minister Vijay Rupani, on Tuesday, declared to cut Value Added Tax (VAT) charged by it on petrol and diesel by four per cent. So far, the government has been levying 24% VAT on petrol and diesel.

VAT 24%  on petrol and diesel

This announcement becoming effective from midnight, the new rate of petrol and diesel in Gujarat will be Rs 67.53 and Rs 60.77 per litre respectively. And it will cause decrease in the annual income of the state government by Rs 2316 crore, said Rupani.

As Gujarat is going to polls later this year, the announcement is being seen as an attempt by the government to woo public. However, Rupani refused to call this as an election oriented announcement.

“Some days back, Central Government had announced cut in excise on fuel and it had also recommended state governments to consider change in their taxation so that people of the country can have relief in charges of petrol and diesel. Elections are coming in Gujarat, but not in other states. Plus, this is going to a long term and steady rate,” said Rupani.

Deputy Chief Minister Nitin Patel who is holding the Finance portfolio called the decision as ‘Diwali gift’ to the people of Gujarat and said, “We will have cut in the income due to this decision. But we are hoping that due to cheaper rate of the fuel, vehicles of bordering states will also buy fuel from Gujarat which will compensate the loss of income to some extent as the sale of the fuel will increase.”