Petro revenues boost Centre, states’ coffers

  • Anupama Airy, Hindustan Times, New Delhi
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  • Updated: Apr 11, 2012 23:21 IST

At a time when oil companies are set to raise the prices of petrol, citing losses, and the government is struggling with its increasing fuel subsidy burden to shield the consumer from the impact of high global oil prices, the petroleum sector continues to contribute heavily and generate huge revenues for the central and state exchequer.

Thanks to various taxes and duties that have been imposed on both the raw material (or crude oil) and the end products (or the petroleum products), the sector has delivered Rs. 100,000 crore to the central and state kitty in the first half of 2011-12.

The three state-owned oil companies have already announced plans to soon increase petrol prices by R3-4 per litre to be followed by an increase in diesel and cooking gas.

On every litre of petrol — priced at Rs. 65.6 per litre (in Delhi), the total taxes levied by the central and state government stand at Rs. 26.5 and then there is an additional Rs. 1.5 that you pay to the petrol pump dealer as his commission. Oil companies say they are currently losing Rs. 6.4 on every litre of petrol sold.

Similarly, on every litre of diesel that is priced at Rs. 40.9 per litre (in Delhi), the consumer is paying Rs. 7.4 as taxes to the centre and states and another Rs. 0.9 per litre as dealer’s commission. Oil companies are claiming an under-recovery of over Rs. 13 on every litre of diesel sold. Petrol pump dealers are also demanding increase in their commission from the present fixed amount to 5% of the price of petrol and diesel. If implemented, this could further deepen the hole in your pockets.

“Petroleum sector will continue to contribute huge revenues and the expected contribution to the central and state revenues during 2011-12 is likely to be around Rs. 2.5 lakh crore,” a senior government official told HT.

The states, which earn revenues by imposing royalty on crude oil and gas, sales tax/VAT on petroleum products and other taxes imposed as octroi and entry tax—earned Rs. 51,559 crore in the first six months of 2011-12.


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