New Delhi, May 22 -- States ruled by the Bharatiya Janata Party (BJP) may lower value-added taxes (VAT) on transport fuel following the Centre's excise duty cut, four people aware of the plans said.

An empowered group of secretaries on the Iran war discussed the need for VAT cuts to soften the blow from costly crude, and the Centre may shortly urge states to reduce the tax, the people said on condition of anonymity. The central government has already cut excise duty by Rs.10 per litre on diesel to zero and that on petrol to Rs.3 last month.

"State governments headed by the BJP may reduce VAT on transport fuels. Diesel is the primary product being considered for levy reduction given its impact across sectors," said one of the four people...