Karnataka earns 48% more from fuel tax in 6 months | Bengaluru News – Times of India

BENGALURU: Rising petrol and diesel prices may have left motorists and transporters worried, but the state government is laughing all the way to the bank as the spiral has helped its coffers swell by almost 50 per cent.
In the first half of this fiscal year, which ended on September 30, the government earned a whopping Rs 9,720 crore from taxes it levies on petrol and diesel, which is 48% more than the Rs 6,549 crore it racked up during the corresponding period last year.
If the upward trend in fuel prices continues or even if they stabilise at the current level, which appears more likely, the government’s earnings would easily cross Rs 20,000 crore by the end of current fiscal, according to a senior official from the commercial tax department, who did not wish to be named. “The department is also expecting an increase in consumption of fuel in the coming days as all Covid-19 curbs have been lifted,” the official added.
Since the sales tax being levied by the state government on petrol and diesel is ad valorem in nature, which means it is calculated on the prevailing market price of fuel, the state’s revenue increases every time the prices are hiked or consumption goes up.
The state levies 35 per cent tax on petrol and 24 per cent on diesel. At this rate, the government on Thursday collected around Rs 28 as tax on a litre of petrol and Rs 21 on diesel. In Karnataka, fuel prices have touched an all-time high with petrol being sold at Rs 109-112 per litre and diesel at Rs 99-101.
The rising fuel prices have helped the government make up for the revenue losses incurred during the lockdown last year and earlier this year. Fuel sales took a severe beating in the 2020-21 fiscal with no public transportation for the most part of 2020 and from March to June this year.
Though lockdown restrictions were removed gradually from July 1, fuel sales started picking up only in August 2021, when all curbs on travel and transportation were lifted. The government lost nearly Rs 5,000 crore due to the lockdown during 2020 and 2021.
While increased consumption of fuel contributed to this growth, rising fuel prices since November have also made the government richer.
Some experts feel the increased revenue and encouraging forecast for the remaining half of the fiscal year may help chief minister Basavaraj Bommai slash tax on fuel, something he assured last week. Bommai said he would think of reducing prices of petrol and diesel after the October 30 bypolls after assessing the state’s financial condition. He has been under pressure to cut tax ever since his Tamil Nadu counterpart MK Stalin reduced prices of petrol by Rs 3.
“These figures show the government is making windfall gains while people are suffering. The CM has to keep his word and slash the state’s tax on fuel immediately as he has promised. Otherwise, people will think it was just a gimmick before the bypolls,” said B Ramalinga Reddy, KPCC working president.

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Sagar Biswas

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