With the carbon cess being withdrawn, petrol and diesel have become cheaper in the hill state of Uttarakhand from Tuesday, officials said.
Petrol prices have been slashed by 25 paise a litre while diesel prices have come down by 50 paise per litre, the officials said.
An order to this effect was issued by the state government late on Monday.
The Trivendra Singh Rawat-led cabinet had on May 11 decided to waive off the carbon cess in the state as Uttarakhand was suffering a major revenue loss since most vehicles were going to neighbouring Uttar Pradesh for refuelling.
Uttarakhand Finance Minister Prakash Pant said owing to the carbon cess, while the state exchequer was earning Rs 24 crore annually, the supply of diesel and petrol was being adversely hit.
With the implementation of the decision, the diesel and petrol prices in Uttarakhand have come almost at par with Uttar Pradesh, officials said.
The officials added they expect the fuel consumption to go up as well, leading to a windfall for the state coffers to the tune of around Rs 60 crore annually.