Karnataka Fuel Prices to Rise as Government Increases Tax on Petrol and Diesel


Karnataka announces an immediate increase in tax on petrol and diesel, raising prices to generate revenue for state guarantees. Learn more about the new rates and economic impact.

Karnataka, India (Bollywood Fever): Fuel prices in Karnataka are set to rise following the state government’s announcement on June 15 to increase the tax on petrol and diesel.

According to a notification from the state government, the Karnataka Sales Tax (KST) on petrol will rise from 25.92 percent to 29.84 percent, while the tax on diesel will increase from 14.3 percent to 18.4 percent. This change will take effect immediately, as per the state finance department’s statement.

Before the hike, petrol in Bengaluru was priced at Rs 99.84 per litre, and diesel at Rs 85.93 per litre.

This increase comes after the Lok Sabha elections, with the state government needing to allocate Rs 50,000 crore to Rs 60,000 crore annually to implement its five key guarantees. A senior finance department official noted that the higher fuel taxes are expected to generate an additional Rs 2,500-Rs 2,800 crore in this financial year.

In addition to raising fuel taxes, the state government has taken several other measures to boost revenue. These include increasing the guidance value of properties by 15-30 percent, imposing an additional excise duty (AED) of 20 percent on all slabs of Indian-made liquor (IML), raising AED on beer from 175 percent to 185 percent, imposing a 3 percent additional cess on newly-registered transport vehicles, introducing a lifetime tax on electric vehicles (EVs) valued above Rs 25 lakh, and intensifying tax collection efforts.

The five guarantees implemented by the Congress government are: free travel for women on non-AC state-run buses; 200 units of free power per month; Rs 2,000 per month for each female head of the family; 10 kg of food grains per month for BPL (below poverty line) families; Rs 3,000 per month for two years to unemployed graduates; and Rs 1,500 per month for two years to unemployed diploma holders.

These guarantees benefit 5.10 crore people in the state and will cost the exchequer Rs 36,000 crore in 2023-24. To support these initiatives, Chief Minister Siddaramaiah has allocated Rs 52,009 crore for the schemes this fiscal year.

Siddaramaiah’s revenue-deficit budget for 2024-25, his 15th budget, has a total outlay of Rs 3,71,383 crore, with a deficit set at Rs 27,354 crore. This marks the first time annual borrowings have exceeded Rs 1 lakh crore in a fiscal year.

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