Ahead of the Maharashtra Assembly elections, slated to be held in October this year, the Bhartiya Janata Party-Shiv Sena- Nationalist Congress Party coalition government has announced a reduction in value-added tax (VAT) on fuel in the Mumbai metropolitan region from July 1.

The decision announced by Deputy Chief Minister and Finance Minister Ajit Pawar in his 10th State Budget, touted as populist, comes as a breather for the logistics industry as it will help in significantly reducing prices of diesel and petrol, which will in turn help in reducing overall logistics cost.

Pawar has announced a reduction in taxes on diesel and petrol in the municipal areas of Brihanmumbai, Thane, and Navi Mumbai. The tax on diesel has been lowered from 24 per cent to 21 per cent, while the tax on petrol has been reduced from ’26 per cent + 5.12′ rupees per litre to ’25 per cent + 5.12′ rupees per litre.

As a result of this proposal, the price of petrol per litre in the municipal areas of Thane, Brihanmumbai, and Navi Mumbai is set to decrease by around 65 paise per litre, and the price of diesel will be reduced by nearly Rs 2.60 per litre.

The move is aimed at bringing uniformity in tax on petrol and diesel prices. The decision to reduce VAT was taken following representations from petrol pump and vehicle owners.

The decision, however, would cost the exchequer Rs 200 crore.

This is the second time that the state government has reduced taxes on fuel prices. In 2022, the Maharashtra government had cut taxes on petrol and diesel, thus bringing down the prices. Earlier this year, the Central government announced a nationwide reduction in fuel prices.

To give a further boost to the logistics sector, the state government has announced a new initiative, “Gaon Tithe Godam” (godown in every village). This initiative will be implemented to provide storage facilities for agricultural produce. Construction of 100 new godowns and repair of existing godowns will be undertaken in the first phase.

Pawar presented the budget for the fiscal 2024-25 with a total spending plan of Rs 6,12,293 crore. This breaks down into estimated revenue receipts of Rs 4,99,463 crore and projected revenue expenditure of Rs 5,19,514 crore. The budget anticipates a revenue deficit of Rs 20,051 crore.