📷 Image Credits: Moneycontrol
In a recent development in Karnataka, the state government has announced an increase in the sales tax on petrol and diesel, leading to a rise in fuel prices effective immediately. The hike comes after the Karnataka Sales Tax was raised from 25.92 percent to 29.84 percent on petrol and from 14.3 percent to 18.4 percent on diesel. As a result, the price of petrol has surged by Rs 3, reaching Rs 102.86 per litre, while diesel now costs Rs 88.94 per litre, particularly impacting consumers in Bengaluru. This move is anticipated to generate additional revenue of approximately Rs 2,500-Rs 2,800 crore in the current financial year. The state finance department official highlighted that despite the increase, fuel prices in Karnataka remain lower compared to neighboring states. This decision comes in the wake of the Congress-led state government having to allocate a significant budget for the implementation of five guarantees, involving an annual expenditure of Rs 50,000 crore to Rs 60,000 crore. The previous revision of fuel prices in November 2021 under the BJP-led government saw a reduction in petrol and diesel rates to stimulate the economy post-Covid-19. Additionally, various measures have been taken to boost revenue collection, such as raising guidance values of properties, introducing additional excise duties on liquor and beer, as well as levying cess on newly-registered transport vehicles and EVs above Rs 25 lakh. Despite the expenditure on the five guarantees benefiting a significant portion of the population, costing the exchequer Rs 36,000 crore, Chief Minister Siddaramaiah has allocated a substantial amount of Rs 52,009 crore for the schemes in the current financial year. His recent budget proposal for 2024-25 indicates an outlay of Rs 3,71,383 crore, with an expected deficit of Rs 27,354 crore, resulting in borrowings exceeding Rs 1 lakh crore in a fiscal year. This decision by the Karnataka government to raise fuel prices illustrates a strategic move to generate revenue amidst economic challenges and fulfill budgetary requirements.
