Govt pushes pace on petro sales tax cut

The move on sales tax has gained momentum since the finance ministry might not be willing to go in for any more cuts in central duty rates to check increasing oil prices. Incidentally, a committee under chief economic advisor Ashok Lahiri is looking into the overall tax structure on petroleum products and crude oil.

Staring at increasing crude oil prices, the government may not have much of an option but to allow oil firms to marginally revise upwards the price of diesel. However, a final decision will only be taken after the petroleum minister meets the prime minister on the issue.

Technically, oil firms need to increase diesel prices by at least Rs 1.50 to make up for the under-recovery on the diesel front while on the petrol front there is almost import parity price. However, there are expectations that on October 15, oil firms may be allowed to marginally hike the price of diesel by around 50p to 70p per litre.

The remaining under-recovery will be absorbed by the oil firms. “Equitable burden sharing is what the government will look at”, sources in the petroleum ministry said, while adding that the recent surge in international crude prices is mainly due to imbalance in demand supply of sweet crude.

Strategic Reserve Bill soon
New Delhi: As a part of an overall policy of oil security, the ministry of petroleum is moving ahead with the Strategic Oil Reserve Bill. The Law Ministry is in the process of giving its observations, after which the petroleum ministry will give a final shape to the cabinet note, sources in the petroleum ministry said. Funding of strategic reserves, which has been a contentious issue earlier, also forms part of the Bill, sources said. The NDA goverment had earlier mooted that a cess be levied on petro products to get funds for strategic reserves. —ENS