Fuel rates to go up in Karnataka as govt looks to shore up state revenue

The Congress-JDS government in Karnataka Friday increased tax rates on petrol and diesel to 32 per cent and 21 per cent respectively, citing adverse impact on the state revenue collection due to continuous fall in the prices of crude oil in international market.

Prior to the revision, the tax rates on petrol and diesel were 28.75 per cent and 17.73 per cent, respectively.

The revised rates for petrol and diesel are Rs 70.84 per litre and Rs 64.66 per litre, respectively.

The revision has been made due to continuous fall in the prices of crude oil in international market from past two-and-a-half months, which has resulted in base price of both fuels plummeting substantially, causing adverse impact onstate's revenue collection, the chief minister's office said in a statement.

Despite the revision, the retail price of petrol and diesel in Karnataka are lower compared to neighbouring states, considering the base price of the fuels as on January 1, 2019,it claimed.

It also said there was additional collection of Rs 1.14 and Rs 1.12 per litre on petrol and diesel, respectively, because of the government increasing the tax rate, from 30 per cent to 32 per cent and from 19 per cent to 21 per cent, respectively, from July 15, 2018.

However, considering the substantial increase in the base price of petrol and diesel, the government had reduced the incidence of tax on these fuels by Rs 2 per litre from September 17 last year to give relief to the consumers.

"Accordingly, the tax rate on petrol and diesel came down from 32 per cent to 28.75 per cent and from 21 per cent to 17. 73 per cent, respectively."

With effect from October 5, 2018, the Union government also reduced the central excise duty on petrol and diesel by Rs 1.5 per litre and also directed Oil Marketing Companies to cut petrol and diesel prices by Rs 1 per litre out of their own margin, the statement added.