The State government, which condemned the hike in the fuel price is benefited as the State taxes are imposed on the basic price, said official sources.
In Karnataka, the State taxes on fuels are ad valorem and move in proportion with any rise in petroleum prices.
The petrol price in the State went up by Rs 3.14 a litre after the recent hike. The State will get an additional Rs 0.84 on sale of every litre of petrol, sources said. The average daily sales of petrol is around 40 lakh litres.
The State has kept autofuels out of the Value Added Tax (VAT) regime and charges 25 per cent sales tax on petrol and 18 per cent sales tax on diesel.
In addition, there is a five per cent entry tax levied on every litre of petrol or diesel coming into the State. The sales tax component is one of the highest among states in the country.
Trade federations are soon planning to petition the State government to slash the sales tax on petrol. “We plan to submit our memorandum after the Koppal by-polls.
“With the model code of conduct in place, the government may not be able to take any decision now,” a senior member of a trade federation said.
Published 19 September 2011, 16:21 IST