Karnataka slashes sales tax on petrol, diesel

Karnataka slashes sales tax on petrol, diesel

BANGALORE: The Karnataka government on Thursday reduced sales tax by 3 pc on petrol and 2 pc on diesel to give marginal relief to consumers across the state.

The state government has also reduced value added tax (VAT) on domestic liquefied petroleum gas (LPG) from 4 pc to 1 pc to give a relief of Rs.10.34 on each cylinder of cooking gas.

"The reduced retail prices of petrol, diesel and LPG will come into effect from Friday. To protect the people of Karnataka from the hike in petroleum products by the central government, the state government has decided to give a relief of Rs.1.35 per litre on petrol and 65 paise per litre on diesel," Panchayati Raj and Rural Development Minister Shobha Karandlaje told reporters.

The price of LPG has been reduced to Rs.348.08 from Rs.358.42. The price of a cooking gas cylinder in the state before the Rs.50 hike by the central government was Rs.306.86.

As a result of the reduction in sales tax on petrol from 28 to 25 pc, retail price of the fuel in Bangalore will be Rs.57.15 per litre as against Rs.58.89. Prior to the hike of Rs.5 by the centre, the price was Rs.52.89.

Following reduction in sales tax on diesel from 20 pc to 18 pc, retail price in Bangalore will be Rs.39.15 per litre as against Rs.39.80. Prior to the hike of Rs.3, the price was Rs.36.43.

The entry tax of five percent on petrol and diesel will remain unchanged. The tax reduction on the three main petroleum products will result in a loss of Rs.2.75 bn to the state exchequer in the remaining nine months of this fiscal (2008-09).

"Petroleum products in Karnataka are sold at the highest rate in the country as the basic price at which oil marketing companies (OMCs) supply in the state is higher than in any other state, especially in the southern region.

The state cabinet has decided to write to the central government on the injustice being done to the state over the last 10 years, when the price was last revised," Karandlaje said.

For instance, the issue price of petrol in Karnataka is Rs.42.75 per litre as against Rs.41.55 in Tamil Nadu, Rs.41.80 in Andhra Pradesh, Rs.40.50 in Kerala and Rs.42 in Maharashtra.

Similarly, the issue price of diesel in Karnataka is Rs.31.09 as against Rs.30.05 in Tamil Nadu, Rs.30.75 in Andhra Pradesh and Rs.30 in Kerala.

"The issue price of petrol and diesel are higher in Karnataka although Mangalore Refinery and Petrochemicals Ltd (MRPL) is located in the state.

Chief Minister B.S. Yeddyurappa, who also holds the finance portfolio, will write to the prime minister, finance minister and petroleum minister on the discrimination against the state on the issue price to resolve the anomaly," Karandlaje said.