The Maharashtra government has issued a notification dated May 14, 2026, cutting the Value Added Tax on petrol under Schedule B Entry 6 of the Maharashtra Value Added Tax Act, 2002 from 18% to 7% for a six-month period commencing May 15, 2026 and ending November 14, 2026.
The notification, signed by Deputy Secretary to Government Sanjay Kandhare and issued under sub-section (1) of section 9 of the MVAT Act, amends Schedule B’s Entry 6 to substitute the figure and sign of 18% with 7% for the specified period. The timing is precise and deliberate — the state VAT cut takes effect on the exact day that India’s oil marketing companies raised petrol prices by ₹3 per litre at the national level, the first revision in four years.
The significance of this move cannot be overstated in the context of Maharashtra’s fuel pricing. Maharashtra’s VAT structure on petrol has historically been among the heaviest in the country — Mumbai residents pay a petrol VAT of approximately 39.54% on the dealer price, placing Mumbai’s petrol prices among the highest in India. An 11 percentage point reduction in the headline MVAT rate from 18% to 7% represents a meaningful structural relief, though the full impact on consumer pump prices will depend on how the base price and the percentage calculation interact at the dealer level. The net effect for consumers in Maharashtra could potentially offset a significant portion of the ₹3 per litre central hike, providing partial price insulation during the six-month window.
The move mirrors a pattern seen during previous oil price shocks — in 2022, Maharashtra cut VAT on natural gas from 13.5% to 3% — where the state has used its VAT lever as a fiscal cushion when central fuel pricing causes consumer stress. In the current crisis context, with Brent crude surging to $109.21 per barrel on May 15, the rupee near all-time lows of 95.61, and OMCs losing over ₹1,600 crore per day, the Maharashtra government has opted to absorb a revenue shortfall rather than pass the full central hike impact to consumers. The state’s 2022 natural gas VAT cut had caused an annual revenue loss of approximately ₹800 crore — the May 2026 petrol VAT cut, given Maharashtra’s scale of petrol consumption, is likely to represent a significantly larger revenue sacrifice over its six-month duration.
The notification is effective immediately and will remain in force until November 14, 2026, after which the rate will revert to 18% unless extended. The limited six-month window reflects the government’s assessment of the West Asia crisis timeline — implicitly signalling that the Mahayuti government expects the current Hormuz disruption and crude price spike to resolve within that period, or that it is unwilling to make a permanent revenue commitment to an indefinite crisis.
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