'Reports on tax levy for oil cos false'

The Finance Ministry said media reports about new tax proposals to help ease mounting losses at state oil firms due to soaring crude prices were "totally baseless".

The Finance Ministry said in a statement on Wednesday that some media reports about new tax proposals to help ease mounting losses at state oil firms due to soaring crude prices were "totally baseless".

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A leading newspaper reported on its front page on Wednesday that the ministry had proposed a new cess or levy on income and corporate tax to compensate it for losses due to any duty reduction on crude oil and motor fuels. "The reports are largely speculative and in particular, reports about certain new tax proposals are totally baseless," the Finance Ministry said in a statement. "Ministry of Finance points out that nobody from the ministry had briefed the media."

Other newspapers reported similar ideas, but said the proposals had come from petroleum ministry.

Indian policymakers are debating whether to raise petrol and diesel prices to help stem losses at oil firms, which have to sell fuels at discounted rates, worried that such a hike could add to inflation or alienate voters ahead of elections.

Oil Minister Murli Deora said on Tuesday that one other idea under consideration was to impose a levy on income tax in order to create a special fund which would be used to bail out oil retailers, losing tens of millions of dollars a day.
But the additional secretary in the oil ministry, S Sundareshan, added that the levy idea may not find any takers within the government and he did think it would happen.

Asian nations Indonesia and Sri Lanka raised fuel prices at the weekend, deciding they can no longer afford to shield their consumers from soaring world oil prices now around $130 a barrel. Prices in India were last raised in February.