The Madhya Pradesh government today reduced the value-added tax (VAT) on petrol and diesel by 3 and 5 per cent, respectively.
The state government also withdrew the additional cess of Rs 1.50 per litre on diesel.
Notably, the BJP-ruled Gujarat and Maharashtra states had also earlier this week reduced the VAT on these fuels.
"The Madhya Pradesh government has decided to reduce VAT on petrol by 3 per cent. The VAT on diesel is reduced by 5 per cent. Moreover, the additional cess of Rs 1.50 per litre has also been withdrawn," state Finance Minister Jayant Malaiya announced after a meeting with Chief Minister Shivraj Singh Chouhan.
The revised rates will be applicable from midnight today, he said.
"Now, the VAT on petrol has been reduced to 28 per cent from 31 per cent and on diesel to 22 per cent from 27 per cent," the minister said.
Following the rate cut, the petrol will be cheaper by about Rs 1.70 per litre and diesel by about Rs 4 per litre in the state, Malaiya said.
The decision would cause a revenue loss of about Rs 1,000 crore to the state exchequer in the remaining six months of the current fiscal, he said.
The chief minister said the decision to cut the VAT was taken in the interest of the public.
"The decision to cut the prices was taken to provide relief to the common man, besides keeping the needs of farmers in mind. The diesel price cut would also reduce the freight rates which would further bring down the prices of commodities," Chouhan said.
However, state Congress spokesman Pankaj Chaturvedi said the government's move to cut the prices was just an "eyewash".
"Going by the crude oil prices in global market, the petrol price should be less than Rs 50 per litre. This reduction hardly means anything. The fuel prices should be drastically slashed," Chaturvedi said.