The reduction in tax comes just before Diwali in the state, where the Assembly polls are due around the year-end.
“After the central government’s instructions, Gujarat has decided to reduce VAT on petrol and diesel by 4 per cent from today mid-night,” Rupani said at a press meet here.
With this rate cut, the price of petrol will come down by Rs 2.93 and that of diesel by Rs 2.72 in the state, he said.
The effective price of petrol in Gujarat from mid-night today will be Rs 66.53 per litre and that of diesel Rs 60.77 per litre, the chief minister added.
Because of this move, the state government will suffer a loss of Rs 2,316 crore annually.
“But we have taken this decision in the interest of people,” Rupani said.
The lowering of tax in the poll-bound Gujarat follows Union Finance Minister Arun Jaitley recently writing to all state governments nudging them to reduce taxes on petrol and diesel.
The Centre had recently brought down excise duty on petrol and diesel by Rs 2 per litre.