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To generate revenues in the times of coronavirus crisis, several states have increased the prices of petrol and diesel by adding Value Added Tax and cess. On Thursday, the Nagaland government joined the list of states to do so. The government announced cess of 6 per litre on petrol and 5 per litre on diesel from now on. The decision comes after Assam and Meghalaya announced similar measures.

A notification issued by the Nagaland government said, "In exercise of power conferred by subsection 3 of section 3A of the Nagaland (sales of petroleum and petroleum products including motor spirit and lubricants) Taxation Act, 1967 (as amended) the Governor of Nagaland is pleased to notify that in addition to existing rate of tax and cess, the Covid-19 cess shall be levied."

Last week, the Assam government had also decided to prices of petrol and diesel predicting at least 50 per cent revenue loss due to cut in oil prices in the international market.

The government had issued notification stating that VAT (Value Added Tax) for diesel has been fixed at 23.66 paise in the rupee or 17.45 per litre, whichever is higher, and VAT for petrol and other motor spirits at 32.66 paise in the rupee or 22.63 per lire, whichever is higher.

(Also read: Covid-19 cess could hike fuel prices despite record low in international market)

Meghalaya too had decided to increase surcharge on sales tax last week. The price of petrol in the state was raised from 68 to 72 per litre, and the price of diesel has been raised from 61 to 66 per litre.

“The decision to hike the price of petrol and diesel was done with the objective to increase the revenue of the State Government. We are aware that the expenditure required by the State Government for combating Covid-19 is huge. We have taken this small step to increase our revenue generation," Prestone Tynsong, Deputy Chief Minister of Meghalaya, had said.

(Also read: Why excise duty on petrol, diesel could go up further despite low oil prices)

Massive slump in global oil prices have created ground for governments to further increase excise duty on petrol and diesel to meet additional expenditure needs arising from the coronavirus outbreak.

(Also read: India’s oil revenue loss in lockdown seen exceeding $5 billion)

Official sources had earlier hinted that the global oil market could easily allow the government to increase excise duty on petrol and diesel by 3-5 per litre without impacting their pump prices. This could provide government with additional revenue between 45,000-75,000 crore during 2020-21 at a time when expenditure is set to rise to revive economic activity in the country impacted by lockdown.

(With inputs from agencies)