Jharkhand plans diesel tax hike to raise funds

November 11th, 2008 - 2:05 pm ICT by IANS  

Ranchi, Nov 11 (IANS) The Jharkhand government is planning to increase the sales tax on diesel by 3.5 percent to 18 percent to generate additional resources, a senior government official said here Tuesday. According to the official, the Deputy Chief Minister and Finance Minister Stephen Marandi has cleared the proposal to increase the sales tax on diesel to 18 percent from the current 14.5 percent.

A few months ago, when the central government had increased the prices of diesel and petrol, the Jharkhand government had decreased the sales tax by 3.5 percent to give some relief to consumers.

“The sales tax increase will generate an additional Rs.1.4 billion revenue per year for the state government,” the official told IANS, adding: “In Bihar and West Bengal, the diesel sales tax rates are 17 and 19 percent respectively.”

At the beginning of this year, the sales tax on diesel was 20 percent in Jharkhand. The Petroleum Dealers Association in the state had then protested the high rate. Consequently, while presenting the state budget in March this year, Marandi had reduced the sales tax on diesel to 18 percent.

“In two phases, the state government reduced the sales tax rate by 5.5 percent and this is causing a loss of around Rs.2.10 billion per year to the state’s coffers,” the official said. The proposal to increase the sales tax is likely to be cleared by the state cabinet soon, he added.

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