Tuesday, 29 November 2022

Government may cut fuel taxes to help Common people

Government may cut fuel taxes to help Common people

India, the world’s third-largest consumer of fossil fuel, may cut taxes on diesel and petrol to save state-run energies firms from bleedings as international oil prices surges an eight-year high amid Russian military against Ukraine, and may prepare a motive package to attract private investments in augmenting domestic production of gas and oil, three people aware of the matter said.

The government, which is committed to making sure energy supplies to its people at an affordable rate, keeps vigil on the geopolitical developments and explores all options, including a reduction in central excises on fuels if needed, they added, requesting anonymity.

He added.

So far, the common person is unaffected as state-owned oil marketing companies have not raised petrol and diesel prices since 4th November (on account of the ongoing assembly election cycles, which will end on 7th March) even as they are now losing about ₹8-10 per liter on the sales of the two fuels, one of them said. “Enough cushions are available,”

Government may cut fuel taxes to help Common people 1pixabay image

Read More: Income Tax Return deadline extended for selected categories

Currently, central excise on petrol and diesel is ₹27.90 per liter and ₹21.80 a liter, respectively. Before Diwali last year, the central government reduced central levies on petrol by ₹ five a liter and diesel by ₹10.

A third person said that while ensuring uninterrupted energy supply at affordable rates is the government’s immediate task, it has been deliberating a range of policy reforms to augment domestic oil and gas production to reduce overdependence on imports. India imports about 85% of the crude it processes.

According to him, interdepartmental consultations are on to bring some policy reforms such as uniformity in taxation, allowing market-determined gas pricing for all kinds of natural gas. Creation of an (SPV) special purpose vehicle with joint funding from state-run energy firms to conduct the initial exploration, allowing global firms to join after a discovery is made.

He said.

“Lack of uniformity in taxation of domestic and foreign firms is a major disincentive. While total tax incidence for domestic companies is 25.17% under the simplified income-tax tax regime, it works out to 43.68% for foreign energy firms,”

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