Mumbai: The Maharashtra Cabinet has approved the proposal to reduce sales tax on diesel by 5 per cent while that on petrol will remain the same. This means that consumers will have to pay Rs 2 less on every litre of diesel.
On Wednesday, the strike called by the All Maharashtra Petrol Dealers Association was called off on assurances from the state government that there would be a substantial reduction in sales tax on diesel and petrol.
But on Friday the Cabinet approved a cut of only 5 per cent in sales tax on diesel while sales tax on petrol was unchanged.
This means for Mumbai, Thane and Navi Mumbai sales tax on diesel has been brought down from 33 per cent to 28 per cent, a reduction of Rs 2.43 per litre and for the rest of Maharashtra sales tax has been brought down from 30 per cent to 25 per cent, a reduction of Rs 2.34 per litre.
State Finance Minister Jayant Patil said: “By this move we expect that the our sales tax rates will be brought on par with those in Goa, Gujarat and Karnataka and the flight of sales in border areas will stop."
Patil also said that this reduction would lead to a loss of Rs 150 crore to the state exchequer between December 1 2006 to March 31 2007. He has also warned that they would review the results of this cut and make changes in the next year's budget if required.
The Maharashtra government has said that they would also appeal to the Central Petroleum Ministry to bring about a uniform floor rate of sales tax on fuel for all states at 20 per cent.
This would check the flight of fuel sales on border areas and ensure uniform revenue for all neighbouring states.
With inputs from Deborah Grey.
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