Petrol and Diesel price may be reduced

Petrol and diesel prices will be reduced by about Re 1 per litre and 50 paise, respectively, if states agree to forego incremental sales tax revenues they stand to earn on this week's fuel price hike.

States like Andhra Pradesh, Kerala, Karnataka, Punjab and Uttar Pradesh stand to gain over a rupee in sales tax on every litre of petrol sold and over Rs 0.50 on diesel after this week's Rs 5 and Rs 3 hike in the two auto fuel prices.

Petroleum Minister Murli Deroa on Thursday wrote to chief ministers of 30 states and union territories asking them to ''at least forego the incremental tax'' revenues so as to ease the burden of spike in international oil prices on common consumers.

''It is the duty of both Central and State Governments to provide maximum relief to the consumers... (while) the Central Government is contributing over Rs 120,000 crore, it is also expected that the state governments will not lag behind in helping the consumers in sharing their burden,'' he wrote.

Centre has cut customs and excise duties on crude oil and products to protect consumers. Foregoing the incremental sales tax revenues will not in any way impact the state earnings.

Andhra Pradesh, which has the highest sales tax of 33 and 22.25 per cent on petrol and diesel, is earning Rs 1.38 and Rs 0.59 a litre extra. In Mumbai that has a sales tax of 30.64 and 28 per cent, incremental revenue will be Rs 1.17 and Rs 0.75 respectively.

Akali Dal-BJP ruled Punjab levies a 31.68 per cent sales tax on petrol and will earn Rs 1.16 per litre more sales tax.

So far, West Bengal, Bihar and Tamil Nadu have cut sales tax on the two fuel to minimise the June 4 hike.