No decision yet by state on cutting VAT, oppn slams latest fuel rate hike

Chaitanya Marpakwar and Somit Sen

Mumbai: The Centre may have urged states to cut VAT (value added tax) amid fuel price hikes, but the Mahayuti govt is yet to take a call on this in Maharashtra, senior finance department officials said. In the past, NDA-governed states have responded by lowering state levies, though some of them still keep them higher than the average rates.

Officials said it will be tough for the state govt to reduce VAT given its tight financial situation. Maharashtra’s outstanding debt is projected to reach Rs 9.32 lakh crore. Continuous borrowing to fund supplementary demands and welfare schemes like Laadki Bahin has caused a widening deficit too. The state finance department is headed by CM Devendra Fadnavis.

Recently, the state govt reduced VAT on aviation turbine fuel to 7% from the prevailing rate of 18%. Here, VAT on petrol is set at 25% and for diesel, it is 21%.

The opposition on Monday criticised the BJP-led Central govt over the latest fuel price hike. Petrol and diesel prices in Mumbai were raised again on Monday. Petrol was revised from Rs 108.49 per litre to Rs 111.21, an increase of Rs 2.72. Diesel moved from Rs 95.02 per litre to Rs 97.83, up by Rs 2.81. Industry representatives said the latest revision takes the cumulative rise in fuel prices to about Rs 8 per litre over the past 11 days, following four hikes in quick succession.

The Shiv Sena (UBT)’s Priyanka Chaturvedi said that in Mumbai, petrol price “has reached shagun ka 111 number” and “diesel is reaching 100 in metros in the next price hike… which is likely in the next 24 hours.” State Congress chief Harshavardhan Sakpal said that while crude oil prices are falling worldwide and brent crude has dropped below $100, in India, petrol and diesel prices keep rising.

The NCP (SP) is planning to launch a statewide protest over issues like fuel price hike and inflation, among others. The party’s MP Supriya Sule said, “There is fuel shortage in the country, and many pumps have boards saying there is no petrol and diesel. We had warned the govt six months ago. Rahul Gandhi and other opposition parties were saying fuel prices were going to increase. You can see our speeches in Parliament. But we were not listened to. We had said earlier that govt had no planning, and it is now visible.”

Transporters said that frequent and incremental fuel rate increases are creating uncertainty for fleet operators and customers alike. They said a one-time, transparent pricing decision would help businesses plan sustainable operating strategies, set freight structures and assess viability, instead of recalibrating costs every few days.

Fuel accounts for nearly 55% of truck operating costs, transporters said, and repeated hikes are compounding other rising expenses such as tyre costs, insurance, tolls, maintenance, finance costs and statutory compliances.

Bal Malkit Singh of All India Motor Transport Congress said the impact is going beyond transporters and becoming a national supply chain issue. He cited reports from several regions indicating a substantial number of vehicles have been left idle due to higher operating costs and operational challenges, with estimated losses of nearly Rs 3,500 per vehicle per day in certain sectors.