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Despite high petrol & diesel rates, Centre has no plans to reduce taxes

Despite the slump in international oil prices, petrol and diesel costs higher in India due to high incidence of central and state taxes.

By: ENS Economic Bureau | New Delhi |
March 14, 2017 1:19:59 am

Petrol and diesel prices in India are the highest among its neighbouring countries, but the government has no plans of reducing high taxes on them. In contrast to per litre petrol price of Rs 45.26 in Pakistan, Rs 51.69 in Sri Lanka and Rs 64.23 in Nepal, the same for India was Rs 71.14 in Delhi as on March 1, as per data presented by the finance ministry in Lok Sabha.

Among the neighbouring nations, only Bangladesh had a higher petrol price of Rs 72.56 per litre. Diesel prices in Delhi were also among the highest at Rs 59.02 per litre, in contrast to Rs 41.97 in Sri Lanka, Rs 52.64 in Pakistan and Rs 54.85 in Bangladesh, the finance ministry data showed.

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Despite the slump in international oil prices, petrol and diesel costs higher in India due to high incidence of central and state taxes. Price of US crude oil fell below $50 per barrel for the first time this year last Friday, bringing back worries of a glut in the global commodity market. But this is unlikely to help Indian consumers, as most of the reduction in crude oil price is matched by the government with the frequent increase in taxes.

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While high taxes on fuels have added to the government’s kitty, the finance ministry has clearly rules out any reduction in taxes. “Government has no such proposal under consideration at present to reduce taxes on petrol and diesel,” Minister of State for Finance Santosh Kumar Gangwar said in written reply in Lok Sabha on Friday.

The finance ministry does not expect the oil prices to move much beyond the range $50-55 per barrel in the medium term. In this year’s budget, the government did not announce any reduction in the cess on crude oil, despite a market wide expectation of halving the cess.

At present, nearly Rs 28 per litre is added as central taxes to the price of petrol and Rs 24 per litre to the price of diesel. The Centre levies Rs 21.48 of excise duty and Rs 6 of custom duty on per litre of petrol (unbranded). On diesel, the Centre imposes Rs 17.33 excise duty and Rs 6 custom duty on per litre of diesel (unbranded). Duties on branded petrol and diesel are slightly higher.

Besides the central taxes, the states also levy various taxes on petrol and diesel. The Union finance ministry has maintained that taxes collected on petroleum products are used for building infrastructure in the country.

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First published on: 14-03-2017 at 01:19:59 am

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