UP hikes tax on liquor, petrol; eyes additional mop up of Rs 4,420 cr

Since petrol and diesel do not fall under GST, states enjoy considerable leverage in imposing such taxes at the local level

In the backdrop of dwindling revenues following the covid-19 lockdown, the Uttar Pradesh government today hiked the tax on liquor and petroleum products (petrol and diesel) to partly shore up its exchequer.
 

The upward revision of tax on these two commodities is expected to bring additional revenues of Rs 4,420 crore to UP during the current 2020-21 financial year.
 

Since petrol and diesel do not fall under the purview of  the Goods and Services Tax (GST), states enjoy considerable leverage in imposing such taxes at the local level.
 

The decision was taken at the state cabinet meeting chaired by chief minister Yogi Adityanath here this afternoon.
 

Talking to the media later, UP finance minister Suresh Khanna said following lockdown in March, the financial situation of the state had come under stress owing to falling revenue collection, especially taxes.

“Against the tax demand of Rs 12,141 crore in April 2020, the tax mop up of UP stood at merely Rs 1,178 crore, which is a massive dip in net collections. This has made the overall financial situation tight for the state,” he noted adding the state was forced to explore additional sources of revenue to fill the gap.
 

According to the hike proposals, the state has hiked the prices of petrol and diesel in UP by Rs 2 per litre and Rs 1 per litre respectively from midnight. The per litre rates of petrol and diesel currently at Rs 71.91 and Rs 62.86 respectively, have been upgraded to Rs 73.91 and Rs 63.86, he said adding the hike in fuel prices would bring additional revenue of Rs 2,070 crore during the current fiscal.
 

“We have not increased the diesel prices beyond Rs 1 per litre, since it is commonly used in the state farm, transport and industrial sectors,” Khanna added.
 

Last year, the total consumption of petrol and diesel in UP stood at 470 crore litre and 1,130 crore litres respectively.
 

Besides, the Adityanath cabinet approved the proposal to hike the country liquor and foreign liquor prices as well, which is projected to bring additional mop up of Rs 2,350 crore to the coffers. The prices have been increased for all the category of foreign liquor viz. economy, medium, regular, premium and imported.
 

The applicable hike in the Indian made foreign liquor ranges from Rs 10 per for a 180 ml bottle of the economy segment to Rs 400 for a bottle of 500 ml or above for the imported liquor variety, Khanna informed.
 

Recently, the CM had asked officials to find ways to increase the state’s revenue to cope up with the drastic fall in tax collection owing to lockdown. It was expected the state would hike the liquor and petrol prices.