Tamil Nadu government will be beefing up its revenue with the increase in value added tax (VAT) on petrol and diesel by Rs 2,500 crore. According to the state government the VAT increase has resulted in a retail price hike of Rs 3.25 per litre of petrol and Rs 2.50 per litre of diesel.

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The government said the VAT was increased so that the state revenue is protected as and when the global oil prices come down and the interests of consumers would be protected when there is a hike in the global oil prices.

However, whether the state government would be able to achieve its target of Rs.2,500 crore is doubtful as the sales have come down at the outlets by about 85 per cent and it is not known when the normal sales levels would be reached again, said an industry official.

"There are about 5,000 oil outlets in Tamil Nadu and the per day average sales per outlets will be about 4,000 - 5,000 litres and the monthly throughput will be 150,000 litres per month," K. Suresh Kumar, General Secretary, Consortium of Indian Petroleum Dealers (CIPD) told IANS.

"The sales have come down by 80-85 per cent per day. There is also confusion as to the functioning time of the outlets as district officials ask the outlets to stop sales at 1 p.m. The sales volume will not pick up fast," Kumar added.

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The CIPD has demanded a financial stimulus package from the oil marketing companies (OMCs) as their members are incurring losses due to the Covid-19 induced lockdown.