New Delhi, Jul 31 (PTI): Petrol price was cut by Rs 2.43 per litre and diesel by Rs 3.60 a litre, the third reduction in rates this month, with effect from midnight tonight.

Petrol in Delhi will cost Rs 64.47 per litre from tomorrow instead of Rs 66.90 at present, while a litre of diesel will cost Rs 46.12 as against Rs 49.72 currently, Indian Oil Corp (IOC) said in a statement.

Petrol and diesel prices were last cut by Rs 2 per litre each, excluding local sales tax, from July 16 but consumers in Delhi were robbed of the benefit as Arvind Kejriwal government raised VAT on the two fuels.

As a result, petrol price in Delhi went up by 28 paise a litre after considering a local government decision to hike VAT or sales tax on the fuel from 20 to 25 per cent.

Rates of diesel, on which VAT was raised from 12.5 per cent to 16.6 per cent, saw a smaller reduction of 50 paise per litre.

Prior to this, the price of petrol was cut on July 1 by 31 paise per litre and diesel by 71 paise a litre.

"Prices of petrol and diesel were last revised on July 16, 2015. Since last price change, there has been a decrease in international prices of both petrol and diesel. INR-USD exchange rate has, however, depreciated during this period.

"Combined impact of both these factors warrants a downward revision in prices, the impact of which is being passed on to the consumers with this price decrease," the statement said.

State-owned fuel retailers -- IOC, Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) -- revise petrol and diesel prices on 1st and 16th of every month based on average imported cost and rupee-dollar exchange rate in the previous fortnight.

"The movement of prices in international oil market and Rupee-USD exchange rate shall continue to be monitored closely and developing trends of the market will be reflected in future price changes," the statement added