The slew of tax cuts in petroleum products last weekend may have saved the consumers from an even steeper price hike, but will leave the government poorer with Rs 49,000 crore in revenues for 2011-12.
This, along with moderate growth in tax collections from other avenues, could upset the government's plan to prune the fiscal deficit to 4.6% of gross domestic product (GDP) this year from 5.1% last year.
While the official macroeconomic accounts do not give out disaggregated tax collections from each sector, it is widely known that more than half of the Centre's excise and customs duty revenues emanate from petroleum products.
The budget estimates presented in February had pegged this year's excise and customs duty collections at Rs 3.16 lakh crore implying that about Rs 1.60 lakh crore would have come from petroleum products.
According to government's estimates, Friday's decision to abolish the 5% customs duty on crude oil, slashing import tax on petroleum products to 2.5% from 7.5% and reducing excise duty on diesel to Rs 2 a litre from Rs 4.60 a litre will result in a revenue loss of Rs 49,000 crore.
An official, who did not wish to be identified, said: "Meeting the indirect tax revenue collection targets in 2011-12 will not be an easy task to accomplish after the restructuring of taxes in petroleum products."
Government sources indicated mid-course revision of revenue targets was a possibility as finance ministry scrambles for options to tap new sources of revenue to meet targets.