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Bhubaneswar: The state government Tuesday increased the Value Added Tax (VAT) on petrol and diesel by three per cent each, making the fuel dearer.
The finance department issued a notification stating that the VAT on petrol and diesel would be 26 per cent from earlier rate of 23 per cent. Petrol and diesel across the state will cost more by `Rs1.39 per litre and Rs 1.14 per litre respectively from Tuesday.
“By raising VAT by 3 per cent on the petroleum products, the state government will get additional revenue of Rs361 crore per annum. It would amount to `90 crore additional revenue in the next three months during the current fiscal,” finance minister Pradip Kumar Amat said.
The government decided to increase VAT on the fuel as the state’s revenue collection was badly hit due to frequent decline in the prices of petrol and diesel. “In order to keep a balance in revenue collection of the state, the government raised the rate of VAT on the fuel,” he said.
Amat said the state government had earlier reduced VAT on petrol and diesel from 20 per cent to 18 per cent in June 2014 when fuel prices spiked in the international market.
Again the state government increased the VAT to 23 per cent in December 2014 as the oil price fell in the international market.
The finance minister said that the Central government, meanwhile, has hiked basic excise duty, additional excise duty, special excise duty and cess on petrol and diesel by 104.30 per cent and 231.30 per cent respectively.
Both the opposition parties – Congress and Bharatiya Janata Party – on the other hand demanded immediate rollback of the new VAT rate on the fuel.