HYDERABAD: The continuous decrease in petrol and diesel prices is causing worry to the state government. To keep its tax revenue intact, the state government chose another route by increasing VAT on petrol and diesel.
On Thursday, the state government increased VAT on petrol from the existing 31 per cent to 35.20 per cent. The VAT on diesel has been increased from the present 22.25 per cent to 27 per cent. But, an order issued to this effect was stated that it was an ‘errata’ to another order issued on January 16, 2015 increasing the VAT on petrol and diesel.
In the orders issued in January, the state government stated that the VAT on petrol should be 31 per cent plus ` 2 per litre. The VAT on diesel will be 22.25 per cent plus `2 per litre. But, the tax structure was revised upwards through the errata on Thursday, which fetches good revenue for the government. Whenever, the petrol and diesel prices were reduced, the state government loses VAT revenue proportionately. So increase in VAT per cent would keep its revenue intact.