Ahmedabad: Even as the Gujarat government has effected a sharp cut in Value Added Tax (VAT) rate on petrol and diesel, data shows the government pocketed more than Rs. 8,500 crore as VAT on the two fuels in the first six months of the ongoing financial year.
VAT on the two automobile fuels is one of the key revenue sources for the state government. Data shows the state collected nearly Rs. 2,600 crore as VAT on petrol between April and September, and over Rs. 6,000 crore on diesel.
While the burden of record-high fuel prices has been back-breaking for consumers, rising prices have led to a surge in VAT revenues as the levy is linked to the price. However, prices of both fuels have fallen significantly since yesterday due to the lowering of levies.
The central government announced excise duty reduction of Rs. 5 on petrol and Rs. 10 on diesel from November 4, which was followed by the state government cutting VAT rate on the two fuels by Rs. 7 a litre.
As a result, petrol price in Ahmedabad has fallen from nearly Rs. 107 on November 3 to Rs. 95.18 today, while diesel has come down from over Rs. 106 a litre to Rs. 89.12, significantly easing the burden on fuel consumers.
Incidentally, both fuels have become cheaper after a gap of nearly 40 days. Both fuels have fallen below Rs. 100 for the first time in almost a month.