Bhubaneswar, Jan. 5: The prices of petrol and diesel went up today after the government increased the Value Added Tax (VAT) on petroleum products by 3 per cent.

With the increase in the price, petrol and diesel across the state has become costlier more by Rs 1.39 and Rs 1.13 per litre, respectively. In Bhubaneswar, a litre of petrol is now sold at Rs 60.13 and diesel at Rs 49.12.

Finance minister Pradip Kumar Amat said: "Because of the fluctuation of prices on petroleum products, the state government is constantly losing revenue from petrol and diesel. With the increase in VAT, the government will able to mop up about Rs 90 crore additional revenue in the next three months during the current fiscal. We will be able to get additional revenue of Rs 361 crore per annum from the petroleum sector only."

Sources said the state had so far lost Rs 417 crore per annum due to low oil prices. Now, VAT on petrol and diesel has increased to 26 per cent from the earlier rate of 23 per cent. A notification to this effect issued last night.

However, the finance minister argued that VAT on the petroleum products was quite low compared to other states. While Odisha is charging 26 per cent of VAT on the petroleum products, Punjab is charging to the tune of 32.1 per cent and Karnataka has imposed 31 per cent tax.

"In June 2014, we had reduced VAT price on the petroleum products from 20 per cent to 18 per cent. If such a situation comes up, we will take steps accordingly," he said.

However, the state government had enhanced VAT to 23 per cent in December 2014 as the oil price had fallen in the international market. Amat argued that the Centre had hiked basic excise duty, additional excise duty, special excise duty and cess on petrol and diesel by 104.30 per cent and 231.30 per cent, respectively. "No one should blame the state government on this front," he said.

The Opposition has lambasted the state government for increasing VAT on petrol and diesel. "Only last week, the state government had increased tax on the essential items. Now, they have increased VAT on petrol and diesel. It will affect common men in general," said Pradesh Congress Committee president Prasad Harichandan.

BJP legislative leader Basant Kumar Panda said: "The state government should immediately rollback the price. We condemn such action of the state government."

Last week, the state government had hiked tax on the unspecified items by 1 per cent such as electronic appliances, TV, refrigerator, air-conditioner, washing machine and two and four-wheelers. Besides, it has imposed a 10 per cent surcharge on liquor by increasing the existing VAT rate from 25 per cent to 35 per cent.