Shimla (Himachal Pradesh) [India], March 23 : The Himachal Pradesh Legislative Assembly on Monday passed the Himachal Pradesh Value Added Tax (Amendment) Bill, 2026, enabling the state government to levy a cess of up to Rs 5 per litre on petrol and high-speed diesel, despite strong opposition protests and a boycott of the proceedings.
The move by the Congress-led government in Himachal Pradesh aims to generate a dedicated revenue stream for welfare schemes targeting widows and orphaned children. The proposed levy, termed as an "orphan and widow cess," will be imposed at rates to be notified by the government, with an upper ceiling of Rs 5 per litre.
Chief Minister Sukhvinder Singh Sukhu defended the decision, stating that the government retains flexibility in fixing the rate. "The maximum limit for this cess is Rs 5; whether we impose 10 paise or Rs 2 is at our discretion," he said, adding that the intent is to support vulnerable sections of society.
He asserted that even after the imposition of the cess, fuel prices in the state would remain lower than in neighbouring Punjab and Haryana. The Chief Minister also targeted the opposition, urging them to raise the issue of central levies, noting that the Centre collects around Rs 27 per litre as cess on fuel.
The opposition Bharatiya Janata Party (BJP), however, termed the move "anti-people" and warned of a cascading impact on inflation. BJP legislators boycotted the Bill and staged a walkout from the House.
BJP MLA and state spokesperson Randhir Sharma said, "Imposing a cess of up to Rs 5 per litre on petrol and diesel will put an additional economic burden on the people of Himachal Pradesh. It will not only affect vehicle owners but also increase overall inflation, impacting all sections of society."
He further cautioned that the move could reduce fuel sales in the state. "Currently, fuel is slightly cheaper in Himachal compared to neighbouring states, which boosts sales. After this cess, vehicles--especially in border areas--may prefer refuelling in Punjab or Haryana, leading to revenue losses for the state," he said.
Opposition leaders also objected to the nomenclature of the cess, questioning the appropriateness of linking it to vulnerable groups. They warned that the hike could increase transportation costs, affect agriculture and tourism, and lead to a rise in prices of essential commodities, including the transportation of apples and other produce.
The government, however, maintained that the cess is a "targeted welfare initiative," and the entire proceeds will be credited to a dedicated fund for widows and orphans to support social security schemes.
The Bill will now be sent to the Governor for assent. Once approved, it will come into force, leading to an increase in fuel prices across the state.