30 June,2011 06:56 AM IST | | Ravikiran Deshmukh
Move will result in nearly Rs 438 crore revenue loss, says Chavan
MOUNTING pressure from the UPA government at the Centre has forced the Congress-NCP coalition in the state to agree to a 2 per cent cut in Value-Added Tax (VAT) on diesel and kerosene.
So, while diesel will be cheaper by 72 paise per litre and kerosene by 28 paise, the state is expected to lose nearly Rs 438 crore in revenue.
Activists from Shiromani Youth Akali Dal hold LPG cylinders as they shout slogans during a demonstration against price hike in Amritsar
While announcing the state cabinet's decision, Chief Minister Prithviraj Chavan said the new VAT rate on diesel in Mumbai, Thane and Navi Mumbai would be 24 per cent instead of the existing 26 per cent.
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In the rest of the state, the VAT will come down to 21 per cent from 23.
On kerosene made available through the Public Distribution System, the VAT will now be three per cent, instead of five, said Chavan, adding that the expected loss to the state kitty would be nearly Rs 438 crore.
Chavan said the Centre's reduction in excise and custom taxes will cause a revenue loss of at least Rs 49,000 crore, which will impact Maharashtra's share from the central allocation of funds for development work as well.
"The total loss in revenue would be close to 1,400 crore," the CM said, adding that steps would be taken to ensure the state budget does not go into revenue deficit and that development work is not affected.
According to sources from within the government, the finance department was not ready for a major tax reduction fearing its impact on revenue but the CM introduced the proposal despite it not being part of the cabinet meeting's agenda.
Ministers from both the Congress and the NCP spoke in favour of the relief. After the cabinet meeting, the finance department did its homework and forwarded the proposal to the CM, which was later announced.
'Waive off Octroi'
City corporators, eager to bring in some let-up to the hike-struck Mumbaikar after the hike in LPG and diesel prices, have asked the civic body to do away with the three-percent Octroi duty on natural gas.
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The logic is that the hiked price of LPG, a derivative of natural gas, would indirectly be lowered.
In a meeting yesterday, BMC Standing Committee Chairperson Rahul Shewale requested the civic authority to scrap the local tax on the gas in order to slash the cost of cooking gas reaching every household in the city.
"The price of every commodity is soaring in the city and it is becoming difficult for people to manage. I have requested the Municipal Commissioner to not collect any Octroi on the gas," said Shewale.
But the Octroi waiver would not guarantee a sure relief, as it is not directly imposed on LPG.u00a0 "We are still studying the pros and cons of the proposal," said an official from the BMC.
Rinkita Gurav
