Patna: In a bid to provide relief to farmers, the Bihar government today decided to lower the VAT on diesel, reducing the price of the fuel by 14 paise a litre.
A decision to bring down the VAT from 18.36% to 18% was taken by the state cabinet presided over by chief minister Nitish Kumar.
Briefing reporters, deputy chief minister S K Modi said, “The state exchequer will suffer a loss of around Rs 37 crore per annum by slashing the VAT.”
Noting that the rate of tax on prices of petroleum was “at its lowest level”, Modi said the state government had already reduced the VAT on kerosene from 12.5% to 5% on 12 July, 2010.
Asking the Centre to reconsider its decision on the hike in prices of diesel, cooking gas and kerosene, Modi described the decision to raise the prices as “unilateral”.
He criticised the Centre for hiking the prices of diesel, cooking gas and kerosene without taking the states into confidence and alleged that it wanted “to trap state governments by asking them to reduce VAT.”
“The hike in prices of diesel, cooking gas and kerosene is condemnable. The Centre, as part of a conspiracy, wants to trap the state governments by asking them to reduce the VAT,” Modi, who also holds the finance portfolio, said.
“We now have very little scope to bring down the prices of petroleum products in Bihar,” he said adding that the Centre should not increase the prices of diesel because it would directly affect agriculture and transport.