He asked state governments to follow suit by cutting a sales tax or VAT by a similar amount.
In Delhi, where the fuel prices are the lowest among all metros and most state capital, petrol is sold at Rs 84 per litre and diesel at Rs 75.45.
Union Minister of Petroleum and Natural Gas Dharmendra Pradhan, who is in Bhubaneswar at present, requested Odisha Chief Minister Naveen Patnaik to cut taxes on fuel, ANI reported. The prices of petrol are maximum across the state, soaring above Rs 91 in many districts of the state.
Jaitley said it will be a test for those states whose leaders were only tweeting and indulging in lip sympathy.
"Reciprocating positively to FM's announcement, the Govt Of Gujarat has also chose to reduce Rs 2.50 on both petrol & diesel. This time if other state governments do not do it then people will ask them", he said. In response, the governments of Maharashtra and Gujarat have also announced a reduction in excise duties.More news: United States pulls out of 1955 treaty with Iran, says measures long overdue
Some states - Rajasthan, Andhra Pradesh, West Bengal and Karnataka - had earlier slashed Value-Added Tax to pass on the benefits to people, but most other states have not taken any action so far. "Consequently, we are hoping for a Rs 5 per litre reduction", the finance minister said. Jaitley, however, said asking oil companies to bear a part some burden is not going back on deregulation. The government has upped its ante and steps has been taken to cut down on the borrowing by Rs 70,000 crore and it has allowed OMCs to raise $10 billion. Of this, IOC's share would be roughly half and the rest split equally between HPCL and BPCL.
"The Brent oil since yesterday has crossed 86$/bbl which is the highest in the last four years".
Indian Oil Corporation (IOC), the country's largest fuel retailer, hiked the price of diesel and petrol by 21 paise and 14 paise respectively on Thursday.
Maharashtra charges the highest sales tax and VAT on petrol at 39.12 per cent. "The government has cut down borrowing this year by Rs 70,000 crore".
"Excise duty to be reduced by Rs.1.50 and OMCs will absorb 1 rupee". Jaitley expressed confidence in maintaining the fiscal deficit target for the current financial year despite the reductions.