Diesel is likely to get cheaper by Rs 2.37 per litre in the capital as the Delhi government on Friday announced a decrease in the value added tax (VAT) on the fuel from July 20.
The Delhi Chief Minister, Ms Sheila Dikshit, said while announcing the decision: "We have decided to decrease the VAT on diesel from 20 percent to 12.5 per cent from July 20. This is likely to bring down the prices of the fuel in the capital."
The Delhi government had increased the VAT on diesel in March from 12.5 per cent to 20 per cent to meet the increased expenditure on infrastructural projects related to Commonwealth Games 2010.
Diesel costs Rs 40.10 per litre in the capital and after the decrease in VAT, it will cost Rs 37.73 per litre.
"It was necessary to reduce the VAT on diesel as petrol pump owners were facing losses," Dikshit said.
Petrol pump associations were protesting against the increased VAT since March, saying vehicle owners get diesel filled from neighbouring states as Delhi had the highest VAT on diesel.