The Madhya Pradesh government on Friday announced cuts in state-imposed taxes on diesel and petrol, which will lead to a reduction in the prices of the two petroleum products by Rs 4 and Rs 1.62, respectively.
The move is expected to cause a revenue loss of an estimated Rs 2,000 crore per annum to the state exchequer, official sources said.
The decision came after a meeting of the state’s Finance Minister Jayant Kumar Malaiya with Chief Minister Shivraj Singh Chouhan earlier in the day.
Malaiya told reporters that the VAT on diesel had been reduced by 5 per cent to 22 per cent from 27 per cent and cess was also slashed by Rs 1.50.
Similarly, the VAT on petrol had been cut by 3 per cent to 28 per cent from 31 per cent, the minister said.
According to Malaiya, the state government would have to bear a loss of Rs 1,000 crore in revenue in the next six months, which will swell to Rs 2,000 crore in annual terms.