After the central government reduced the excise duty on diesel and petrol by two rupees, the states will now be asked to reduce VAT. Petroleum Minister Dharmendra Pradhan said that by writing letters to Chief Ministers of the states, they will urge the reduction of VAT on petrol and diesel.

It is notable that the Central Government can not pressure the State Governments to cut VAT, so the Petroleum Ministry can only insist on the Chief Ministers. Referring to reducing the price of petrol and diesel by the central government, the Chief Ministers will also appeal to take action on their behalf.

Explain that BJP also praised the central government's deduction of excise duty, saying that the Central Government has done its job, now it is the turn of the states to reduce VAT and give relief to the common people. On the other hand, a central government official said that the government will also ask the oil marketing companies to cut the price of petrol and diesel as part of their efforts.

This will result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an inbuilt mechanism in the design of GST that would incentivize tax compliance by traders. It is expected to decrease the cost of collection of tax revenues of the Government, and will, therefore, lead to higher revenue efficiency.

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