Amid widespread protests, Finance Minister Pranab Mukherjee will soon write to state chief ministers to consider cut in sales tax on petrol to partly neutralise the impact of the Rs 7.54-per-litre hike in the price of the auto fuel.
"We are awaiting inputs from the Petroleum Ministry. The Finance Minister will be asking the state chief ministers to lower duties," an official said.
Meanwhile, Uttarakhand, Kerala and Delhi have already announced cut in Value Added Tax (VAT) on petrol. Earlier also the Centre had asked states to sacrifice part of the revenue to reduce the burden of price hike on consumers. Several states then had responded to the call and reduced sales tax, or VAT, on petrol in summer last year.
Oil Marketing Companies (OMCs) had last week increased the price of petrol by over Rs 7.5 a litre in view of high crude oil prices and rupee depreciation.
The decision evoked sharp reaction from several quarters, including allies of the ruling UPA. In this backdrop, the government has decided not to increase prices of diesel, kerosene and LPG (cooking gas).
"We are not considering hiking prices of diesel, domestic LPG and kerosene. It is out of question right now," said Oil Minister S Jaipal Reddy after a meeting with the Mukherjee.
He said no dates have been fixed for the meeting of the Empowered Group of Ministers (EGoM) to take a view on freeing of diesel prices.
Industry body Assocham also demanded that the Centre and states should cut taxes to reduce the burden on auto users.