After the Centre announced central excise duty cut on petrol and diesel on Wednesday, states too followed suit and Assam, Tripura were the first on Wednesday evening to announce tax cuts on petrol and diesel. Assam chief minister Himanta Biswa Sarma announced VAT reduction of ₹7 on both petrol and diesel with immediate effect. Tripura chief minister Biplab Deb also announced a ₹7 reduction of VAT on petrol and diesel, which will be effective from tomorrow. “A happier Diwali for the 37 lakh people of Tripura,” the chief minister tweeted. After Assam and Tripura, Karnataka and Goa governments announced price reduction.

Himachal Pradesh chief minister Jai Ram Thakur said the state government will issue a notification soon announcing a reduction of VAT on petrol and diesel prices.

In Bihar, there will be a further reduction of state VAT by ₹1.30 on petrol and ₹1.90 on diesel apart from ₹5 and 10 ₹reduction on excise duty, Sushil Kumar Modi tweeted. Effectively, petrol will be cheaper by ₹6.30 and diesel by ₹11.90 in Bihar, he said. 

Union petroleum minister Hardeep Singh Puri said while the Centre’s move will bring a big relief for fuel consumers, the state should also reduce VAT extending further relief to consumers. Union minister and former minister of petroleum and natural gas, Dharmendra Pradhan said the decision of the Centre to reduce excise duty on petrol and diesel sets the template for the state governments to follow suit. “Concrete action from state governments will lead to a further reduction in fuel price and more relief to consumers,” he said.

While the BJP-ruled states have announced VAT cut, the Congress has slammed the Centre’s move by terming it as PM Modi’s jumla. “In year 2021, prices of petrol were hiked by ₹28 and diesel by ₹26 per litre. After losing 14 bye-elections and 2 Lok Sabhas, reducing the petrol-diesel price by ₹5 and ₹10 is tom-tommed as ‘Diwali gift’ of Modi Ji! Hey Ram…” Congress leader and spokesperson Randeep Surjewala tweeted.

“Government of India has taken a significant decision of reducing Central Excise Duty on petrol and diesel by ₹5 and ₹10 (per litre) respectively from tomorrow. Prices of petrol and diesel will thus come down accordingly,” the finance ministry said in a statement.

This is the highest-ever reduction in excise duty and rolls back a part of the ₹13 and ₹16 per litre increase in taxes on petrol and diesel effected between March 2020 and May 2020 to avoid passing on to consumers the sharp fall in international oil prices, reports said.

Based on April to October consumption numbers, the loss of revenue to the government due to the excise duty cut will be ₹8,700 crore per month. This totals to an annual impact of over ₹1 lakh crore, industry sources said. For the remainder of the current fiscal, the impact would be ₹43,500 crore, a PTI report said.