Following a hike in petrol prices by oil companies on Monday night, the state government, on Tuesday, reduced the value-added tax (VAT) on the fuel by two per cent in a bid to keep its election promise of ensuring that the petrol price in the state remains under Rs 60 per litre. The reduction in VAT, from 22% to 20%, came into effect from Tuesday midnight.

When oil companies increased the price of petrol by around 90 paise on Monday night, the fuel, which stood at Rs 58.85 per litre in the state, went up to Rs 60.70 per litre.

Commissioner of commercial taxes Dipak Bandekar , told TOI that following the price hike, the state government decided to slash VAT on the fuel by two per cent in order to keep the price per litre under 60.

Chief minister Laxmikant Parsekar, during the presentation of the budget this year, had announced a VAT hike on petrol. This was despite the BJP's 2012 manifesto promise that fuel prices would be lowered.