State Congress was critical even as the Shivraj Singh Chouhan government cut VAT on diesel and petrol. Opposition leaders described the cut in taxes as "too little" and done under the extreme pressure of the Union government keeping upcoming bypoll and elections in mind.
Madhya Pradesh has cut the sales tax or VAT on petrol and diesel by up to 5 per cent after Gujarat, Maharashtra and Himachal Pradesh, following Centre' instruction.
Later in the evening Himachal Pradesh, ruled by Congress, announced a 1% reduction in Value-Added Tax. The State Government also withdrew the additional cess of Rs 1.50 per litre on diesel.
The decision was taken after a meeting presided over by Chief Minister Shivraj Singh Chauhan. The announcement has come after Maharashtra and Gujarat also reduced the prices of petrol and diesel.
The chief minister said the decision to cut the Value-Added Tax was taken in the interest of the public.
The move is expected to cause a revenue loss of an estimated Rs 2,000 crore per annum to the state exchequer, official sources said. Following the slashing of the excise duty on petroleum products, Finance Minister Arun Jaitley had said the Rs 2 per litre cut in excise duty on petrol and diesel was done to give relief from relentless increase in prices and leave more money in hands of consumers. "While base price of petrol and diesel in Bihar stands at INR 55 a litre, the same is INR 51 a litre in Jharkhand".
The central government cut excise duty on petrol and diesel by Rs2 last week, the first tax cut on fuel by the current government, to tame rising inflation.