Mumbai: The Maharashtra government on Friday hiked the value-added tax (VAT) levied on petrol by Rs1.50 per litre.

The measure is expected to generate additional revenue of Rs600 crore, a senior official said. The state has not touched diesel price, fearing losing revenue to neighbouring states, he added.

“The decision is taken to garner additional revenue. Instead of going in for ad valorem where VAT is revised in percentage, the state government preferred to increase VAT in rupees," deputy secretary (finance) Rajendra Bhagat told PTI.

Ad valorem is levying of tax or customs duties in proportion to the estimated value of the goods or transaction concerned.

“There was some correction in petrol prices from June, benefiting customers. The latest increase in VAT would revert prices to June level," he said.

Uday Lodh, president of the Federation of All Maharashtra Petrol Dealers’ Association, said the VAT hike would affect some retailers at Maharashtra’s border areas.

“The resulting petrol price rise would affect individual consumers more, the segment dominated by passenger car and two-wheeler owners," he added.

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