Karnataka   

Karnataka to consider reduction in taxes on petroleum products

Bangalore: The Karnataka government is considering a downward calibration of the sales tax and entry tax on diesel and petrol — currently the highest in the country. The State levies taxes at the rate of 25 per cent on the basic price of diesel and 33 per cent on basic price of petrol. This includes the 5 per cent entry tax on both fuels and sales tax. A consumer in Karnataka pays 64 per cent tax on petrol and 32 per cent on diesel which includes taxes and duties levied by the Centre.

The State Ministry on Thursday discussed the various options for reducing taxes levied by the State on petroleum products, particularly on diesel and petrol.

Asked if the Karnataka government was contemplating a package aimed at providing relief to consumers, Minister V.S. Acharya told The Hindu that the Government “was examining the issue in all its ramifications.” The Finance Department has been asked to assess the expenditure burden and the revenues that the Government mobilises through levies on petroleum products. Mr. Acharya said the Government had initiated a study “which is carefully considering all aspects of the issue.” He said that although the study was likely to be completed in three to four days, it was unlikely that tax reductions would be effected before the revised State Budget was presented around July 10. However, he said, the government was committed towards not increasing the bus fares charged by the Karnataka State Road Transport Corporation and the Bangalore Metropolitan Transport Corporation till then.

The sources in the Ministry said the fuel bills of the transport corporations were likely to increase by about Rs. 150 crore a year. Elaborating on the issues under consideration, Mr. Acharya said “expenditure burden” that had arisen from higher fuel prices would have to be considered. The cost increases suffered by State transport undertakings and the Government’s fleet of vehicles would be one set of considerations, he said.

The increase in the general price level, which may also result in a larger burden on the State Government due to increase in Dearness Allowance payments to government employees, is another important issue to be considered.

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