Andhra Pradesh Levies Re 1 Road Development Cess On Petrol, Diesel

The Andhra Pradesh government on Friday issued an ordinance providing for levy of a Road Development Cess of Re 1 each per litre on petrol and high-speed diesel that would net around Rs 500 crore annually.

The ordinance cleared by Governor Biswabhusan Harichandan amended the AP Value Added Tax Act, 2005.

The state Cabinet, at its meeting on September 3, had approved the decision to impose the Road Development Cess.

Considering the necessity of allocating dedicated funds for the development of roads in the state, the government decided to levy the Road Development Cess, in addition to the existing levies on petrol and diesel, in public interest.

Proceeds of the cess will be around Rs 500 crore per annum, Special Chief Secretary (Revenue) Rajat Bhargava said.

The cess amount would be transferred to the Andhra Pradesh Road Development Corporation for exclusive use in developing road infrastructure, he said.

This is the second time in two months that the Y S Jagan Mohan Reddy government has increased the tax on the automobile fuel.

On July 20, year the government revised the tax structure on petrol and diesel, thereby increasing their price by Rs 1.24 and Rs 0.93 per litre respectively, to mop up an additional revenue of about Rs 600 crore per annum.

The new cess will be entirely used for carrying out road works, including the much-needed repairs through the APRDC.

Of the total to be realised, we plan to give at least Rs 100 crore to the urban local bodies which otherwise do not have access to such money, a top official told PTI.

But there is a major catch that could thwart the governments plans.

The RDC is now penniless, without any budgetary support from the state government.

It had borrowed Rs 3,000 crore in February 2019 but all that was used by the previous Chandrababu Naidu regime towards a freebie scheme "Pasupu-Kumkuma".

Beginning November this year, the RDC has to start paying interest on the loan as the moratorium period ends. Besides, a portion of the principal also needs to be repaid.

Principal and interest together will be around Rs 50 crore a month, the top official said, implying that at least Rs 600 crore is required per annum.