Chandigarh: Fuel prices are set to drop in Chandigarh from Thursday with the city administration deciding to bring down the value added tax (VAT) on petrol and diesel.

The administration Wednesday announced that the VAT on diesel or high speed diesel will be reduced from 16.40% to 11.40%.

Similarly, the tax on petrol including branded premium petrol will be slashed from 24.74% to 19.74%, according to a release issued by the Chandigarh administration Wednesday.

The diesel price now will be Rs55.20, Rs2.48 lower than the present rate of Rs57.68 per litre. Similarly, the price of petrol will come down by Rs2.74 per litre to Rs65.66 from Rs68.40 per litre, fuel pump owners said.

With the reduction in the tax on fuel, diesel in Chandigarh will be cheaper by Rs2.23 per litre as compared to the price in neighbouring Mohali district, which falls under Punjab. The gap between the petrol price in Chandigarh and Mohali will also go up to Rs8.11 per litre. At present, petrol price in Mohali is Rs73.77 per litre.

The decision to reduce tax on fuel came after Centre had asked the states to lower tax on fuel. Meanwhile, fuel pump owners in neighbouring cities like Mohali, Panchkula, Rupnagar expressed concerns. “It will lead to a diversion of trade and our business will be severely hit," said Mohali based fuel pump owner Ashwinder Singh Mongia.

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