Why Did Karnataka Increase Petrol Prices?

Why Did Karnataka Increase Petrol Prices?

Why Did Karnataka Increase Petrol Prices? The Karnataka government recently hiked petrol and diesel prices. This increase is due to a change in the sales tax on petroleum products. Petrol prices in the state are up Rs 3 per liter, from Rs 99.84 to Rs 102.84. Diesel costs Rs 3.02 per liter, from Rs 85.93 to Rs 88.95.

The recent fuel price hike in Karnataka has stirred up political and public reactions. Here’s an in-depth look at the situation:

What Happened?

The Karnataka government has increased the sales tax on petrol and diesel, resulting in a price rise of Rs 3 and Rs 3.5 per litre, respectively. This decision follows a meeting chaired by Chief Minister Siddaramaiah with various revenue-generating departments.

Why Did the Government Hike Fuel Prices?

The hike aims to finance the state’s guarantee schemes, particularly the Gruha Lakshmi scheme, which promises Rs 2,000 per month to women heads of households. The state government, led by the Congress party, has faced revenue shortages and needs additional funds to fulfill these guarantees.

What Does the Official Notification Say?

The finance department’s notification, dated June 15, made changes to the Karnataka Sales Tax Act:

  • Petrol: Sales tax increased from 25.92% to 29.84%.
  • Diesel: Sales tax increased from 14.34% to 18.44%.

How Has the Opposition Reacted?

The opposition BJP has announced statewide protests, criticizing the Congress government for the hike. BJP leader R Ashoka replayed old clips of Siddaramaiah criticizing fuel price hikes to highlight what he called hypocrisy. JD(S) leader and Union Minister H D Kumaraswamy also criticized the hike, stating it was implemented to fund the Congress government’s guarantee schemes.

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What Is the Government’s Defence?

Chief Minister Siddaramaiah defended the hike, stating that Karnataka’s taxes on fuel remain lower than most South Indian states and states with a similar economy, like Maharashtra. He pointed out that VAT on petrol in Maharashtra is 25% plus Rs 5.12 additional tax, and on diesel, it is 21%. He also noted that diesel prices in Karnataka are still lower than in Gujarat and Madhya Pradesh.

What Was Discussed in the Review Meeting?

On June 11, Siddaramaiah chaired a review meeting of various revenue departments. The meeting reviewed the tax collection for the first two months of the 2024-25 fiscal year. Tax collection in departments such as excise was slow due to the election season, while the stamps and registration department exceeded targets slightly due to recent guidance value revisions.

What Are the New Fuel Prices?

  • Petrol: Rs 102.84 per litre in Bengaluru (up from Rs 99.84).
  • Diesel: Rs 88.95 per litre in Bengaluru (up from Rs 85.93).

How Much Revenue Does the Government Expect to Generate?

With the price hike, the government anticipates generating approximately Rs 2,000 crore in the current fiscal year.

FAQs

1. Why did Karnataka increase fuel prices?

  • The state government increased fuel prices to generate additional revenue needed to fund its guarantee schemes, especially the Gruha Lakshmi scheme.

2. How much have the prices increased?

  • Petrol prices have increased by Rs 3 per litre, and diesel prices have increased by Rs 3.5 per litre.

3. What is the new sales tax rate on petrol and diesel?

  • The sales tax on petrol is now 29.84%, up from 25.92%. For diesel, it is 18.44%, up from 14.34%.
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4. How has the opposition reacted to this hike?

  • The BJP has announced statewide protests and criticized the Congress government for the hike. JD(S) leader H D Kumaraswamy has also criticized the hike, stating it was done to fund the government’s guarantee schemes.

5. How does Karnataka’s fuel tax compare to other states?

  • According to Chief Minister Siddaramaiah, Karnataka’s fuel taxes are lower than most South Indian states and states with similar economies, like Maharashtra.