KCR Government in Telangana had imposed the first Tax Stroke in the state after assuming office. The government has increased the VAT Tax on Petrol and Diesel up to 2 Rupees per liter. This step will effectively nullifying the price reduction announced by oil companies on Friday.
The continuous fall in Fuel prices is taking a toll on the revenues of the state. Telangana imposes 31% of the base price as VAT on a litre of petrol and 22.25% VAT on a litre of diesel. The price reduction is not being passed on to the consumers off late with Center increasing the excise duty and now the state increasing VAT.
This move of the government may even back fire as per the Experts as the 35 per cent of vehicular movement in the state is cross-state traffic and the vehicles entering Telangana from Maharashtra and Andhra Pradesh will now stop buying the fuel from Telangana and will opt for the other states.This will reduce the sale of Fuel in the state and thereby loss to the state coffers.
