Even as OMCs (Oil Marketing Companies) announced a price cut of Rs 2.42 on litre petrol and Rs 2.25 on a litre diesel, the benefit to customers will be capped as the VAT (Value Added Tax) imposed by Telangana state government on fuel will erode the benefit of price cuts.
A day after fuel retailers cut the prices on fuel on Friday, Telangana state government on Saturday slapped Rs 2 as value-added tax on sale of petrol and diesel per litre. With this, the retail price of petrol and diesel in Telangana becomes costlier by Rs 2 eroding the price cut of over Rs 2.
In Hyderabad, petrol will now be sold for Rs 66.49 and diesel for Rs 54.88 per litre against the original price of Rs 64.49 and Rs 52.88 respectively. The move to slap VAT on fuel is aimed at earning additional revenue of Rs 80 Crore per month.