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Updated May 29th, 2020 at 22:29 IST

J&K hikes tax on petrol by Rs 2, diesel by Rs 1 per litre to shore up revenue

Jammu and Kashmir government on Friday increased the rate of tax on the sale of petrol and diesel in the union territory by Rs 2 per litre and Rs 1 per litre

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The Jammu and Kashmir government on Friday increased the rate of tax on the sale of petrol and diesel in the union territory by Rs. 2 per litre and Rs. 1 per litre respectively. The new rates will be effective from June 1, 2020. The tax increase on petrol and diesel in J&K follows a similar move by the neighbouring states of Punjab, Haryana and Delhi last month. Himachal Pradesh has also enhanced rates on the sale of diesel and petrol effective from 1st June 2020.

States have been increasing the retail prices of petrol and diesel to raise revenue that has been hit hard by a slump in economic activity and consumption, thanks to the coronavirus lockdown and added expenditure on the public health system. Liquor and petrol/diesel are the only retail products states can raise revenue from since all other goods come under the ambit of GST, collected by Centre and then shared with states.

READ | Mizoram To Hike Petrol, Diesel Prices From June 1

Centre raises oil tax

Earlier in May, the Centre hiked excise duty on petrol by Rs 10 per litre and that on diesel by Rs 13 a litre to mop up gains arising from international oil prices falling to a two-decade low. The cash-strapped government will gain close to Rs 1.6 lakh crore in additional revenues this fiscal from a record increase in excise duty on petrol and diesel, that will help make up for revenue it lost in a slowing economy and shutting down of businesses due to the coronavirus lockdown.

READ | Petrol-Diesel Excise Hiked By Rs 10, 13; No Price Rise For Buyers; Rs 1.6 Lakh Cr Windfall

That was the second hike in excise duty in less than two months and will help government garner over Rs 1.7 lakh crore in additional revenues annually at 2019-20 level of consumption, industry officials said. Considering the slump in consumption due to travel restrictions imposed by coronavirus lockdown, the gains in the remaining 11 months of the current fiscal year (April 2020 to March 2021) will be close to Rs 1.6 lakh crore, they said.

Together with Rs 39,000 crore in annual revenues gained from the March 14 excise duty hike of Rs 3 per litre each on petrol and diesel, the Centre stands to gain as much as Rs 2 lakh crore.

(With PTI inputs) (PTI Photo)

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Published May 29th, 2020 at 22:29 IST

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