The government announced a reduction in prices of petroleum products by Rs5 per litre.
Petrol is now available at Rs71.25 per litre and high speed diesel at Rs75.79 according to a notification.
Instead of passing on full benefit to the consumer of reduced oil prices in the international market, the government decided to amend the sales tax collection mechanism to stop about Rs5 from going to them.
The government will still bag Rs25 in terms of taxes and levies on every litre of petrol.
According to the notification, a fixed sales tax of Rs14.58 per litre has been imposed on petrol. Earlier the rate was 20 per cent of the petrol price, or Rs10-12 per litre.
Similarly, the government has fixed the sales tax at Rs29.57 per litre on high speed diesel (HSD). Earlier it was 34pc, or around Rs12-15 per litre.