State tax adding to fuel prices in Telangana | Hyderabad News

February 16, 2021 0 By boss

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HYDERABAD: Apart from other factors, an additional state tax levied in Telangana, is also a reason for the soaring prices of fuel here. As per the rulebook, the state collects an extra Rs 4 for every litre of petrol and Rs 2 for a litre of diesel. While the charge on diesel too was initially fixed at Rs 4, it was revised following multiple representations from the industry.
Incidentally, this state tax is only prevalent in the two Telugu states, Andhra Pradesh and Telangana, across the country. The tax is levied over and above the Value Added Tax (Vat) that is charged on fuel — 33% on a litre petrol and 26% on a litre of diesel.

This additional tax, industry sources say, was initially introduced in the neighbouring state, post the bifurcation of erstwhile AP. Subsequently, Telangana too followed suit. Both states charge Rs 4 per of fuel, though the latter has now slashed the tax on diesel.
“This tax significantly increases the cost of fuel in these two states. While the collection gets deposited in the government coffers, petrol pump owners do not get a single rupee. Their commission is fixed at an average of Rs 3.40 per litre for petrol and Rs 2.30 per litre for diesel,” said a source.
While the continuous escalation in cost — also driven by the extra state tax — has had little impact on the sale of petrol in the state, fuel dealers confess that diesel sales have taken a beating. “The state has been losing business on account of extra tax levied here on diesel. Since the cost in neighbouring states such as Karnataka is less, transport vehicles — or even those who travel there frequently — fill their tanks there. As a result, we lose business and the state losses its income,” said Marri Amarender Reddy, president, Telangana Petrol Dealers Association.

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