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Centre cuts excise duty on petrol by Rs 8

The Centre has decided to cut excise duty on petrol by Rs 8 per litre and on Diesel by Rs 6 per litre. This will effectively reduce the price of petrol by Rs 9.5 per litre and of diesel by Rs 7 per litre.

Finance Minister Nirmala Sitharaman, while making the announcement on her Twitter handle on May 21, requested state governments to follow the lead, especially those who didn’t announce a reduction last time (Novemeber 2021).

“I wish to exhort all state governments, especially the states where reduction wasn’t done during the last round (November 2021), to also implement a similar cut and give relief to the common man”, read her tweet.

, petrol and diesel prices remained stable for about 40 days.  Since the end of a four-and-a-half-month-long halt in rate revision on March 22, rates of petrol and diesel increased by Rs 10 a litre each through 14 revisions. Fuel prices were last hiked on April 6 by 80 paise a litre each.

The Finance Minister also apprised that the government will give a subsidy of Rs 200 per gas cylinder (upto 12 cylinders) to over 9 crore beneficiaries of Pradhan Mantri Ujjwala Yojana.

Revenue implication for the excise duty cut will be around Rs 1 lakh crore per year, while the subsidy on LPG cylinders of the Ujjwala Yojana will cost the exchequer Rs 6,100 crore per year, the minister added.

Other decisions announced by the FM included the calibration of customs duty on raw materials & intermediaries for iron & steel to reduce their price .

Soon after her announcement on fuel prices, other states including Rajasthan and Kerala slashed Value-added Tax (VAT) on petrol and diesel. Rajasthan Chief Minister Ashok Gehlot announced a Rs 2.48 per litre reduction in VAT on petrol and Rs 1.16 per litre reduction in VAT on diesel.

On Twitter, he wrote, “Due to the reduction in the prices of petrol and diesel by the central government, the state government will reduce VAT by Rs 2.48 per litre on petrol and Rs 1.16 per litre on diesel. With this, petrol will be cheaper by Rs 10.48 and diesel by Rs 7.16 per liter in the state.

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