Keeping its promise to not allow petrol prices exceed Rs 60 per litre, the Goa government today reduced the value added tax (VAT) levied on the fuel by two per cent after the hike announced last night.

"The Goa government has reduced the VAT on petrol by 2 per cent brining it to 20 per cent from 22 per cent," a senior officer from state commercial tax department said.

Petrol prices had crossed Rs 60 per litre mark in the coastal state after the price hike announced last night. "The petrol price is now Rs 59.70 per litre," he said.

State Chief Minister Laxmikant Parsekar had increased the VAT on petrol in the recently announced budget but had promised that the taxation would be reduced if it crossed Rs 60 per litre mark. The BJP government on assuming power in 2012 had completely abolished the VAT on petrol, bringing down the prices by Rs 11 per litre.

The petrol prices in Goa were cheapest after the abolition of VAT and the state was losing annually Rs 150 crore due to it.

The government, however, reversed its decision later by imposing marginal VAT on petrol. The VAT was brought to the original pre-2012 period by Parsekar but with a rider that the taxes would be revised as and when required.