After Odisha, Gujarat govt hikes VAT, cess on petrol and diesel

Petrol and diesel will become costlier by Rs 1.90 and Rs 1.82 per litre respectively in Gujarat from midnight, as the state government on Tuesday increased the Value Added Tax (VAT) as well as cess on these fuels.

So far, government used to collect 23% VAT and 2% cess on petrol. Now, the government has increased the VAT by one%, taking it to 24%, and raised the cess by two%, taking it to four%, an official release said.

As a result, consumers have to shell out Rs 1.90 more for a litre of petrol, which will now cost Rs 62.12. "The new rates will come into effect from midnight," the release added.

The VAT and cess imposed on diesel has been increased by 3% and 1% respectively, taking the total VAT to 24% and cess to 4%.

As a result of this, the price of diesel has gone up by Rs 1.82 per litre and the new rate is Rs 50.13, the release said. Justifying the move, the state government claimed that the hike came after a gap of nine years.

In the release, the government claimed that there are eleven states in the country -- Rajasthan, Madhya Pradesh, Kerala, Telangana, Andhra Pradesh, West Bengal, Maharashtra, Jharkhand, Punjab, UP an Uttarakhand-- which charge more tax on fuel than Gujarat.

It also claimed that constantly decreasing fuel prices are making a huge dent in the state treasury, as a result of which the government was forced to cut its spending on pro-people developmental works.
"To cope with the situation, the hike was necessary," the government said.