New Delhi: Many states on Thursday cut the VAT levied by them on the fuel followig the Union government's decision to slash the tax.

BJP ruled states like Karnataka, UP, Haryana, Himachal Pradesh were quick to make the decision. The rumours that Election Commission may soon declare poll dates to the five state assemblies also resulted the hurry.

However, CPM, the major party in the ruling dispensation in Kerala, decided to buck the trend and continue to levy the same tax.

Petrol price on Thursday was cut by the Union government in the range of Rs 5.7 to Rs 6.35 per litre across the country and diesel rates by Rs 11.16 to Rs 12.88.

Since states charge local sales tax or VAT not just on the base price but also on the excise duty levied by the Centre, the total incidence of price reduction is higher. The reduction was larger in states with higher VAT.

Arunachal Pradesh has reduced the value-added tax rates by 5.5 per cent, and Mizoram slashes petrol, diesel prices by Rs 7 per litre.

Karnataka govt reduced fuel tax on diesel, petrol by Rs 7 per litre. Of six of the eight northeastern states which announced reduction of Value Added Tax (VAT) by Rs 7 per litre, four states are ruled by the BJP -- Assam, Tripura, Manipur and Arunachal Pradesh. Mizoram, governed by the Mizo National Front (MNF) and Sikkim led by Sikkim Krantikari Morcha (SKM), both are partners of the National Democratic Alliance (NDA), also reduced the VAT on petrol and diesel by Rs 7 per litre.

Bihar also reduced VAT rates on petrol and diesel by over ₹ 3 per litre.

Earlier, the Rajasthan government stated that the value-added tax imposed by the state will get reduced automatically in a proportionate manner since the centre slashes excise duty on petrol and diesel. Kerala, on the other hand stated that there is no need for the tax to be reduced as there is a clear drop in fuel price across state.

In Delhi, the reduction in petrol and diesel prices were by Rs 6.07 Rs 11.75 per litres.

Goa saw an additional Rs 5.47 a litre cut in petrol and Rs 4.38 on diesel.
Gujarat too had an additional reduction of Rs 5.65 a litre on petrol and Rs 4.32 on diesel. Uttarakhand saw an additional 81 paise reduction in petrol price because of VAT cut. Haryana government also announced a reduction in VAT on the fuels by Rs 12 per litre.

Uttar Pradesh, Karnataka, Tripura and Bihar too have announced VAT reduction.

VAT rates differ from state to state, leading to differential rates of fuel.
The excise duty cut announced on Wednesday night was the highest-ever reduction in excise duty. It rolls back a part of the Rs 13 and Rs 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 at the onset of the COVID-19 pandemic.

That hike in excise duty had taken central taxes on petrol to their highest level of Rs 32.9 per litre and that on diesel to Rs 31.8 a litre.

The tax cut follows an unrelenting hike in international oil prices pushing pump rates across the country to their highest-ever levels. While petrol soared to above Rs 100-a-litre-mark in all major cities, diesel had crossed that level in more than one-and-a-half dozen states.

The total increase in petrol price since the May 5, 2020 decision of the government to raise excise duty to record levels had totalled Rs 38.78 per litre. Diesel rates have during this period gone up by Rs 29.03 per litre.

The relentless increase in fuel prices had been severely criticised by Opposition parties, particularly Congress which had demanded that the government reduce its excise duty.