On Sunday, June 16, India announced new prices for petrol and diesel, reflecting a significant tax hike implemented by the Karnataka state government under the leadership of Congress’ Siddaramaiah. This move, aimed at generating additional revenue for the state, resulted in petrol prices rising by ₹3 per litre, bringing the cost to ₹102.84 in Bengaluru, up from ₹99.84. Similarly, diesel prices saw an increase of ₹3.02 per litre, now priced at ₹88.95, up from ₹85.93. According to the notification, the sales tax on petrol was increased from 25.92% to 29.84%, and the tax on diesel rose from 14.3% to 18.4%.
The rise in sales tax has had a direct impact on the retail prices of both petrol and diesel across Karnataka. This hike is expected to ripple through various sectors, including transportation and goods distribution, potentially leading to higher costs for consumers. The Petroleum Dealers Association indicated that the price increase was a direct result of the tax adjustments made on June 15.
Chief Minister Siddaramaiah defended the hike, emphasizing that even after the increase, fuel prices in Karnataka remain lower than in neighboring states. This defense came amid opposition from the BJP, which announced plans for protests across the state on June 17. Siddaramaiah stated, “The Government of Karnataka has increased VAT on petrol to 29.84% and on diesel to 18.44%. Even after this hike, our state’s taxes on fuel remain lower than most South Indian states and similar economy-sized states like Maharashtra.”
Siddaramaiah highlighted that despite the hike, Karnataka’s fuel prices are still lower than in states like Gujarat and Madhya Pradesh. He criticized the previous BJP government for reducing VAT on fuel while the Central government increased its taxes, which led to reduced revenue for Karnataka. The CM urged the central government to lower its taxes for the benefit of the public. The central government had lifted the freeze on retail fuel prices on March 15, 2024, leading to a reduction of ₹2 per litre for petrol and diesel prices nationwide. This was the first adjustment in two years, following the last revision in April 2022.
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