August 16, 2021 8:39:12 pm
As petrol prices in the country remain unchanged for the last one month after reaching a record high in July, Union Finance Minister Nirmala Sitharaman Monday ruled out a cut in excise duty on petrol and diesel.
Blaming the Congress-led UPA, the finance minister said that the government has to pay off the oil bonds and the interest thereon, issued by the previous regime to state fuel retailers in lieu of the subsidised rates of petrol and diesel as well as cooking gas and kerosene.
“If I did not have the burden to service the oil bonds, I would have been in a position to reduce excise duty on fuel,” Sitharaman stated. “Previous government have made our job difficult by issuing oil bonds. Even if I want to do something I am paying through my nose for the oil bonds,” she added.
In July, petrol prices were hiked nine times while diesel rates were raised on five occasions and cut on one occasion. Currently, the price of petrol in Delhi stands at Rs 101.84 per litre while that of diesel is at Rs 89.87. In Mumbai, petrol currently costs Rs 107.83, while diesel is retailing at Rs 97.45.
How much does the government owe?
“A significant amount is going for interest payment and principal repayment. What unfair burden on me,” Sitharaman said, adding that the “opening balance in 2014-15 was about Rs 1.34 lakh crore and interest repayment was Rs 10,255 crore.” Since 2015-16, the government’s interest burden has been Rs 9,989 crore, annually.
The finance minister stated that the interest on oil bonds paid in the last seven years totalled Rs 70,195.72 crore.
Of the oil bonds, worth a sum of Rs 1.34 lakh crore, only Rs 3,500 crore of principal has been paid so far. The remaining Rs 1.3 lakh crore is due for repayment between this fiscal and 2025-26, Sitharaman said. This fiscal year (2021-22), the government has to repay Rs 10,000 crore. Another Rs 31,150 crore is due to be repaid in 2023-24, Rs 52,860.17 crore in the following year and Rs 36,913 crore in 2025-26.
According to PTI inputs, the collections from the hike in excise duty exceed the amount due to be paid to oil companies.
The Indian Express had earlier reported that the government’s revenue collections from excise duty on petroleum products jumped over 74 per cent year-on-year to Rs 3.45 lakh crore in 2020-21, according to government data
‘Inflation to be within target range’
The finance minister also stated that she expects inflation to remain contained within the target band of 2-6 per cent, set by the RBI, in the current fiscal year.
Sitharaman added that she expected that the revenue would be buoyant in the coming months. There is enough liquidity in the market and credit growth is expected to pick up in the coming festive season, she said regarding pick-up in demand. Both Goods and Services Tax (GST) and direct taxes have improved in the past few months, she said.
‘Rules on retro tax to be framed soon’
Sitharaman said that the rules regarding the scrapping of all tax demands made using the 2012 retrospective tax legislations will be framed soon. This will lead to scrapping of the retrospective tax demands on companies such as Cairn Energy Plc and Vodafone Plc. She added that her ministry officials are discussing closure of retro tax cases, refund and settlement with these companies.
Earlier this month, the Parliament passed The Taxation Laws (Amendment) Bill, 2021, which proposes to amend the Income Tax Act, 1961 to effectively end all retrospective taxation imposed on indirect transfer of Indian assets if the transaction was undertaken before May 28, 2012.
— With inputs from PTI
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