Andhra hikes tax on petrol and diesel, says revenues have dried up
Underscoring that the state’s own revenues have dried up due to Covid-19 pandemic situation, the YS Jagan Mohan Reddy government increased the prices of petrol and diesel by Rs 1.24 and 93 paise respectively by upwardly revising the Value Added Tax (VAT) with effect from Tuesday.
A government order, amending the Schedule-VI of the Andhra Pradesh Value Added Tax Act, 2005, was issued late on Tuesday. As per the order, the cess on petrol has gone up from Rs 2.76 to Rs 4, apart from a VAT of 31%; and that on diesel from Rs 3.07 to Rs 4, apart from a VAT of 22.25%.
In the order, principal secretary Rajat Bhargava explained in detail how the state government had been incurring huge expenditure on tackling Covid-19 pandemic, while continuing to implement flagship welfare schemes for various sections of people over the last few months.
He pointed out that the state government was also giving Rs 2,000 cash assistance to every Covid-19 affected person at the time of discharge from the hospital. The state claims to be spending Rs 500 on each person per day for providing nutritious meals in the state-run quarantine centres along with the best available medical care, he said.
“While the efforts of the state government to tackle Covid-19 pandemic and restart the economy were widely appreciated, the state’s own resources have totally dried up because of lockdown,” he said.
In April, the state had realised only Rs 1,323 crore through its own resources as against Rs 4,480 crore in April, 2019, which was 29.5% of the total expected revenue. Similar trends were also observed for May and June.
“Several states are facing a similar situation and to offset the loss of revenue, they have made upward revision of taxes on petrol and diesel in the months of April and May, 2020,” Bhargava pointed out.
Defending the hike in the cess, the official said the state was only going back to the old VAT regime prevailing between 2015 to 2018 by revising the tax rates for petrol and diesel to “31% + Rs 4/- per litre” and “22.25% + Rs 4/- per litre” respectively.
Opposition Telugu Desam Party lashed out at the Jagan government for increasing the VAT on fuel. “It is a huge burden on the people who have suffered heavily due to Covid-19. How can the state government increase the fuel prices at a time when the crude oil prices across the world have fallen steeply in the last few months?” senior Telugu Desam Party MLA Gorantla Buchaiah Chowdary asked.
He said the people had lost their employment opportunities and were struggling to make both ends meet. “This additional tax will have a cascading effect on various sectors leading to an increase in the prices of essential commodities,” the TDP leader pointed out.