Gujarat on Tuesday became the first state to reduce Value Added Tax (VAT) on petrol and diesel, days after the Union government urged all state Chief Ministers to cut sales tax, or value added tax (VAT), on the two fuels.

According to reports, Gujarat Chief Minister Vijay Rupani reduced VAT on petrol and diesel by 4 per cent, thus bringing down petrol prices by Rs.2.93 and diesel by Rs.2.72 in the state.

The Centre had on October 4 decided to slash the excise duty on petrol and diesel by Rs.2 per litre to cushion the impact of rise in international crude prices.

While, Finance Minister Arun Jaitley had asked all states to cut sales tax or VAT — ranging from 26 per cent to 38 per cent in different states– on fuel to provide more relief to the people.

Earlier, due to the increase in the international prices of petrol and diesel during the last few weeks, the retail selling prices of petrol and diesel in Delhi had risen to Rs.70.83 a litre and Rs.59.07 per litre, respectively, as on October 2.

Despite demands from industry, petroleum products, as well as natural gas, do not come under the Goods and Services Tax (GST) regime. These continue to be taxed as per the old VAT regime.