Announcing the decision, Bengal Finance Minister Asim Dasgupta said: “At this point, the government’s priority is some civil works. For this, the state needs money and has, therefore, decided to withdraw the subsidy.”

The sales tax on petrol has been increased from 20 per cent to 25 per cent; the increase on diesel is from 12.5 per cent to 17 per cent.

The decision was taken by the state Government on January 14, probably anticipating a slash in prices by the Centre.

The Left Front Government had announced that the hike would come into effect only in case of reduction of prices by the Centre.

In June last year, the sales tax on petrol and diesel in the state stood at 25 per cent and 17 per cent respectively. When the Centre announced a hike in prices of fuel then, the Bengal government slashed the sales tax to 20 per cent for petrol and 12.5 per cent for diesel.

According to Dasguta, this led to a revenue loss to the tune of Rs 480 crore for the state Government.

“We cannot incur revenue losses any further. As a result of the fresh tax now, the state is expected to earn a revenue of Rs 380 crore,” Dasgupta said while justifying the state’s decision.