The Maharashtra Government on Wednesday decided to increase, value added tax on petrol and diesel by Rs 2 per litre. VAT on liquor, cigarettes and aerated drinks have also been increased by five per cent. The government claims the tax hike on these items is intended to generate revenue to tackle the drought crisis in the state.

VAT on diamond, gold and the jewellery made out these commodities has been increased from 1 to 1.20 per cent.

The new rates would be applicable from Thursday.

State Finance Minister Sudhir Mungantiwar told reporters that due to decline in global prices of oil, Maharashtra has lost revenue of Rs 300 crore per month but it requires revenue for its various commitments therefore the taxes have been increased. New taxes will Rs 1,600 crore to the state kitty.