To cool prices, govt likely to cut tax on petrol
The government is mulling tax cuts on petrol and diesel to cushion consumers from rising crude oil prices and give relief to millions of inflation-hit car users. Sources told HT the special excise duty on petrol and diesel may be pared by Rs 1- Rs 2 a litre each.business Updated: Jun 28, 2014 01:12 IST
The government is mulling tax cuts on petrol and diesel to cushion consumers from rising crude oil prices and give relief to millions of inflation-hit car users. Sources told HT the special excise duty on petrol and diesel may be pared by Rs 1- Rs 2 a litre each. At present, this specific tariff on petrol is Rs 9.48 a litre and Rs 3.56 for diesel.
The move will likely lead to an immediate reduction in petrol’s retail price by a similar amount. Pump-gate rates of diesel, however, may remain unchanged, despite the tax cuts, as state oil companies presently sell diesel at a loss of Rs 2 a litre.
It will still aid the government’s long-standing plan to free diesel prices from administrative control, on the lines of petrol.
“A cut in excise duty on petrol and diesel in the budget is being examined,” said a source, who did not wish to be identified.
Currently, taxes and duties account for as much as 32.7% or Rs 23.41 in a litre of petrol that consumers buy for Rs 71.56 in Delhi. Likewise, these levies account for 19.8% or about Rs 11.36 in a litre of diesel priced at Rs 7.28 in the Capital.
Last year, the centre collected Rs 64,335 crore from excise duty on petroleum products, which is more than a third (about 35%) of its entire excise collections of Rs 1.79 lakh crore in 2013-14.
The proposed cuts are similar to what the government had announced in 2008 when crude prices had crossed $135 a barrel.
The unrest in Iraq—India’s second biggest crude oil supplier after Saudi Arabia—has pushed global prices in the last two weeks to about $112 a barrel, with analysts warning that the figure may cross $120 if the crisis worsens.