Petroleum ministry begins to put forward tariff proposals

The strategy is to shift to specific duty from the current odd mix, reports Deepak Joshi.

The petroleum ministry has begun its exercise to put forward tariff proposals for the Budget with emphasis on ensuring that the consumers are not impacted by fluctuations in global crude oil prices.

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The strategy is to shift to specific duty from the current odd mix, in which ad-valorem duties based on prices are mixed with specific duties that depend on quantity for key petroleum products-- diesel and petrol.

The current excise duty on petrol is 8.16 per cent of ex-factory price plus Rs. 13.26, while for diesel it is 8.16 per cent plus Rs. 3.32. As a result, the consumer pays for a spurt in global crude oil price as well as the additional burden of ad-valorem excise duty of 8.16 per cent.

"The ministry has suggested a specific duty of Rs. 15.92 for petrol and Rs. 6.08 per litre for diesel in the forthcoming Budget. With this, there will no change in retail selling price of the two mass consumed products," a Petroleum Ministry official told Hindustan Times.

The imposition of specific duty has been sought by the ministry for the past two years. In the last Budget, the finance minister opted for a mixture of ad valorem and specific duties. However, the spurt in global crude oil prices has again brought the issue into focus and made the Petroleum Ministry reiterate its demand so as to protect consumers from the cascading impact of excise and customs duties.

Apart from this, the petroleum ministry is also seeking a complete recast of taxes on kerosene, liquefied petroleum gas, aviation turbine fuel and naphtha. The emphasis is on reducing customs and excise duties on the products, while ensuring that there is no revenue loss to the exchequer, ministry officials stated.

Email Deepak Joshi: djoshi@hindustantimes.com