Maharashtra may cut sales tax to cushion fuel price hike

Maharashtra is contemplating a cut in sales tax on petroleum products to cushion the impact of any sharp hike in prices of petrol, diesel and LPG on consumers.

"We are open to the idea but a final decision will be taken only after seeing what the hike in prices is," Maharashtra Finance Minister Jayant Patil said. The Centre is likely to announce a hike in fuel prices later this week.

The state charges 29 per cent sales tax on petrol "" the highest in the country "" and also levies a surcharge of Re 1 on every litre of petrol sold.

On diesel, the sales tax is 31 per cent, besides the surcharge of Re 1 per litre. Sales tax on petroleum products fetch between Rs 4,000 and Rs 5,000 crore for the Maharashtra exchequer.

A senior official from the state finance ministry said the decision will have to be taken at a political level given the significance of petroleum prices.

"Whatever the cut may be, it will be ensured that it doesn't affect existing revenue projections from the sales tax on petroleum products," he clarified.