• Source:JND
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Karnataka Petrol, Diesel Price Hike: Petrol and diesel prices in Karnataka were increased by around Rs 3 per litre and Rs 3.5 per litre, respectively, after the Congress ruled state government on Saturday announced an increase in the sales tax on petroleum products. This comes days after Chief Minister Siddaramaiah held a meeting of various revenue-generating departments. The Opposition BJP will be holding a statewide protest in this regard on Monday. As per Union Heavy Industries and Steel Minister H D Kumaraswamy, the hike was brought in to finance the state government’s guarantee schemes.

Karnataka Petrol, Diesel Price Hike: What Does Notification Say?

The notification by the finance department, dated June 15, effected changes to the Karnataka Sales Tax Act. With this, the sales tax for petrol increased from 25.92 per cent to 29.84 per cent and for diesel, the rise was from 14.34 per cent to 18.44 per cent.

Karnataka Petrol, Diesel Price Hike: State Government’s Defence

CM Siddaramaiah on Sunday justified the move saying that the “state's taxes on fuel remain lower than most South Indian states and states with a similar-size economy, like Maharashtra”.

“The value-added tax (VAT) on petrol in Maharashtra is 25 per cent VAT plus Rs 5.12 additional tax, and on diesel, it is 21 per cent. Diesel prices in Karnataka are still lower than in Gujarat and Madhya Pradesh,” he remarked.

“The then double-engine BJP government collaborated to divert Karnataka’s resources to other states. The state BJP government kept reducing the VAT on petrol and diesel while the Central Government increased its own taxes,” he said, attacking the central government.

The CM further alleged that the Centre kept filling its coffers, cheating Kannadigas as the revenue was reduced for Karnataka. “Karnataka’s VAT adjustment ensures we can fund essential public services and development projects,” he said in the statement.

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Karnataka Petrol, Diesel Price Hike: Reason Behind The Move

Notably, the state government was under scrutiny from Congress legislators as they complained that all funds were being allocated to the five guarantees promised during the state assembly elections in 2023. In July last year, Deputy Chief Minister D K Shivakumar had asked legislators not to ask for development funds for a year, because of which the latter had publicly expressed dissatisfaction.

The Review Meeting By CM Siddaramaiah

On June 11, CM Siddaramaiah chaired a review meeting of the departments of commercial taxes, stamps and registration, excise, transport and mines and geology, during which tax collection of the first two months of the 2024-25 fiscal was reviewed. Tax collection in key revenue-generating departments, such as excise, was yet to pick up owing to the long election season. Tax collection in the stamps and registration department exceeded targets marginally, largely owing to the recent revision in guidance value. The state cabinet, which convened on June 13, is also learnt to have deliberated on the issue before the government went ahead with the hike.

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Following the revision, the petrol price in Bengaluru is Rs 102.84 per litre, up from Rs 99.84, while the diesel price is Rs 88.95, up from Rs 85.93. With the revision, the government expects to generate around Rs 2,000 crore this fiscal.

The move by Karnataka's Finance Department is believed to impose an additional burden on the retail consumer. The petrol and diesel price hike is likely to have an impact on other sectors as well due to increased costs of transportation and goods distribution.