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The Rajasthan and the Kerala government have reduced VAT on petrol and diesel after the Union government announced a reduction in excise duty on petrol by 8 per litre and on diesel by 6 per litre.

The Rajasthan government reduced Value-added tax (VAT) on petrol by 2.48 per litre and diesel by 1.16 per litre. With this, petrol will be cheaper by 10.48 and diesel by 7.16 per litre in the state.

"Due to the reduction in the prices of petrol and diesel by the central government, the state government will reduce VAT by 2.48 per litre on petrol and 1.16 per litre on diesel. With this, petrol will be cheaper by 10.48 and diesel by 7.16 per liter in the state," Rajasthan Chief Minister Ashok Gehlot wrote on Twitter.

CM Gehlot added that there will be a revenue loss of about 1,200 crore per year to the state. He claimed that Rajasthan had suffered a revenue loss of 6,300 crore due to the two reductions of VAT in the past. With the latest deduction, the state will suffer a revenue loss of about 7,500 crore per annum, the Rajasthan CM wrote on Twitter in Hindi.

On the other hand, the Kerala government also cut taxes on petrol and diesel by 2.41 and 1.36 respectively.

Bowing to public pressure, Finance Minister Nirmala Sitharaman on Saturday announced an 8 per litre cut in excise duty on petrol and 6 a litre on diesel to avoid an increase in fuel prices that were necessitated due to the surge in international oil prices. Announcing on Twitter, Finance Minister Sitharman said that the move will have a revenue implication of around 1 lakh crore per year.

In November the government had similarly reduced excise duty on petrol and diesel last year on the eve of Diwali. It had reduced excise duty on petrol by 5 a litre and diesel by 10 a litre.

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