The effort to raise additional revenue to fund the farm loan-waiver scheme announced in the State Budget on Thursday will see tax on petrol, diesel and electricity go up. Excise duty on Indian-made liquor (IML) has also been hiked, besides tax on motor vehicles.
The hike is expected to net an additional revenue of ₹3,000 crore a year, including about ₹800 crore from petrol and diesel, to the government that is set to waive farm loans worth ₹34,000 crore, said an official in the Finance Department. The hike in prices will not reflect immediately as the budget has to be passed by the legislature and later notified by the government. In all likelihood, the revised prices could come into effect from August 1, the official said.
‘Modest increase’
Chief Minister H.D. Kumaraswamy defended the move to increase tax on petrol and diesel products by 2% by terming it a “modest increase”. Petrol and diesel in Karnataka would still be cheaper among south Indian States, he said. Petrol and diesel prices are set to go up by ₹1.14 and ₹1.12 a litre respectively. After the hike, Mr. Kumaraswamy said, petrol and diesel would cost ₹77.99 and ₹69.55 a litre respectively.
“Since the NDA government under Narendra Modi came to power in 2014, the Centre has increased excise duty on petrol from ₹9.3 to ₹19.48 a litre while the excise duty on diesel has been hiked from ₹9.46 to ₹15.33 a litre. Ours is a modest hike,” Mr. Kumaraswamy said.
Power consumers, who have started paying between 20 and 60 paise a unit more after the Karnataka Electricity Regulatory Commission’s order recently, received another shock in the budget as the tax on consumption of electricity has been increased from the existing 6% to 9%.
A Bescom official explained that the tax would be on monthly consumption and not on other components such as fixed charges. The rate of taxation on consumption of captive energy is proposed to be increased from 10 paise to 20 paise.
The additional excise duty on IML has been increased by 4%, making liquor more expensive. Incidentally, the previous Congress government had in its last budget increased the rate of additional excise duty by 8%.
Tax on motor vehicles has been increased by 50% for private service vehicles based on square metre of floor area. These vehicles are used to transport employees in IT and garment sectors, among others, besides being used by educational institutions.
