The Karnataka government has recently increased the sales tax on diesel from 18.4% to 21.17%, resulting in a ₹2 per litre price hike, bringing the cost to ₹91.02 per litre in Bengaluru, effective April 1, 2025.
Reasons Behind the Tax Hike
The state government has cited the need to generate additional revenue to fund public services and development projects as the primary reason for the tax increase. Despite the hike, officials emphasize that diesel prices in Karnataka remain lower than in neighboring states such as Tamil Nadu, Kerala, and Andhra Pradesh.
Financial Implications for the State
Despite implementing various tax increases over the past year—including hikes in sales tax on petrol and diesel, additional excise duty on liquor, and vehicle registration fees—the Karnataka government reported a nearly 10% shortfall in tax collection for the fiscal year 2024-25. The state collected ₹1.7 lakh crore against a target of ₹1.9 lakh crore, attributing the shortfall to sluggish consumption and enforcement challenges.
Opposition and Public Response
The opposition Bharatiya Janata Party (BJP) has criticized the fuel price hike, arguing that it will exacerbate inflation and increase transportation costs for essential commodities. The BJP has announced plans to stage protests demanding a rollback of the tax increase.
Impact on Consumers
In addition to the diesel price hike, residents of Karnataka are facing increased costs in other areas. Recent adjustments include higher electricity tariffs and milk prices, contributing to the overall financial burden on consumers.
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By BHARAT GLOBAL TIME
