A senior official in the state finance ministry said that while the 2 per cent cut in sales tax on diesel to 21.4 per cent will cost the government Rs 260 crore annually, the loss on account of reduced devolution of central excise will be Rs 350 crore annually. Apart from these, the diesel price hike effected by the union government will push the operating cost of state transport undertaking by another Rs 200 crore. In 2006, when the union government had made similar revision in the taxes, the state started to lose Rs 200 crore annually. "From a state's point of view, this is a substantial hit on its finances," said an official.
