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The Karnataka state government has recently increased the cess on petrol and diesel, leading to a significant rise in fuel prices throughout the state. Announced on June 15, this adjustment has resulted in petrol prices surpassing 100 per litre and diesel prices nearing 89 per litre. This decision contrasts with recent actions by the Central Government, which included reducing the windfall tax on domestically produced crude oil from 5,200 per tonne to 3,250 per tonne.

Specifically, the local Value Added Tax (VAT) on petrol has been increased from 25.92% to 29.84%, and on diesel from 14.3% to 18.4%. Following these changes, the price of petrol in Bengaluru, the state capital, has reached 102.86 per litre, and diesel is priced at 88.94 per litre. Prior to the increase, petrol was available at 99.84 per litre and diesel at 85.93 per litre.

The rationale behind the hike in VAT by the Karnataka government is to generate additional revenue. This additional funding is intended to support various developmental and infrastructural projects within the state.

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The Petroleum Dealers Association anticipates that the price of petrol and diesel will increase by approximately 3 and 3.05 respectively. This rise is expected to significantly affect the transportation sector and the cost of goods distribution, which may lead to increased expenses for consumers in Karnataka.