Nagaland has imposed a COVID-19 Cess on Petroleum
States are starting to target petroleum for revenue. Nagaland recently imposed a cess on petrol and diesel sales.
Cess is a type of tax that is charged on a commodity over and above the base tax liability of the tax payer. It is generally imposed when the government needs to raise funds for a specific purpose. It can be imposed on both direct and indirect taxes. It is a temporary source of revenue for the government.
Nagaland became the first state to impose COVID-19 cess. It has imposed a cess of Rs. 5/ litre on diesel and Rs. 6/ litre on petrol and other motor spirits. The state is seeking to compensate for the loss arising from the economic standstill through the cess as petroleum forms a significant share in the state’s total revenue.
In April, Assam had increased the VAT (Value Added Tax) on petrol, diesel and other motor spirits. To effect this change in taxation rate, the state had amended its Assam Value Added Tax Act, 2003. The increase in taxation is expected to increase the pressure on the economy.