Fuel woes are set to mount with the State Cabinet sanctioning an increase in sales tax on petrol by Rs. 1.5 per litre. The State government also announced an increase in Value Added Tax (VAT) from the existing 12.5 per cent to 13.5 per cent.
The increase in VAT will also increase prices of two-wheelers and motors, separate vehicle parts, petroleum products such as lubricants and oil, televisions, refridgerators, furniture and electrical goods, among others.
The VAT applicable on goods that were being taxed at 5.5 per cent will now be 6 per cent, and will lead to a rise in the prices of bricks, bamboo, non-ferrous metal, paper, hosiery, spices, sweets, processed fruits and vegetables, medicines, sports equipment, milk powder, umbrella and writing material.
Last year, the State government had levied a surcharge of Rs. 2 on petrol and diesel to raise funds for tackling drought. It had also increased VAT by 5 per cent on liquor, cigarettes and beverages. According to government sources, this had added Rs. 1,600 crore to the state treasury, and Friday’s hike is likely to add up to Rs. 2,500 crore.
Sensing possible opposition to the decision, the government said this increase will not be applicable to essential commodities including agricultural tools, books, animal food, wheat, jowar, rice, medicines for cancer and dialysis, milk, vegetables, fruits, flowers, organic fertilisers, seeds, sugar, chillies, turmeric and coconuts.
The Cabinet also approved the Court Infrastructure Policy (CIP), which will be instrumental in constructing new court buildings and residences for judges, expanding and repairing existing buildings.
On Thursday, the Centre hiked petrol prices by 58 paise a litre.
