Petroleum ministry wants FM mandarins to revamp duty structure for petroleum sector to cushion the impact of future oil spike.
NEW DELHI: The petroleum ministry wants the finance ministry mandarins to revamp the duty structure for petroleum sector in order to cushion the impact of future oil spike.
It is likely to suggest bringing the excise duty on aviation turbine fuel (ATF) on a par with diesel, besides bringing down the customs duty on crude oil imports.
Sources said that the petroleum ministry has worked out two options for excise and customs duty based on meetings with the industry.
The exercise is aimed at seeing that when the current trend of low prices gets over there may not be a sudden burdening of consumers and, therefore, under both the options the excise duty on ATF, petrol and diesel is fixed and is not a percentage of the retail price.
There will be a net gain in revenue of Rs 1,831 crore in the first option and Rs 1,258 crore in the second.
The revenue gain could be neturalised through reduction in excise duty on petrol, diesel, ATF and LDO by Rs 0.28 a litre under the first option and Rs 0.19 under the second option.
Both the options include changing the excise duty structure to fixed on ATF, petrol and diesel while increasing it on other petroleum products like naphtha, FO/LSHS, bitumen, LOBS and LDO.
Under the first option, supported by the oil companies, the proposal is to fix excise duty on diesel at Rs 6.08 a litre for diesel, while under the second option at Rs 5.56 a litre from 8.16% plus Rs 3.32 a litre at present.
In both the cases, ATF excise duty will be recommended to be the same as diesel.
In case of petrol, the first option suggests fixing the excise at Rs 15.92 a litre while the second one suggests Rs 15.44 a litre from the existing 8.16% plus Rs 13.26 a litre.
Since both the options include reduction in customs duty on all products, the excise duty changes will not have any impact on the consumer price and the government revenue.
Customs duty changes suggested include scrapping it on crude oil and naphtha from the existing 5% under the first option or bringing it down 2.5% under the second option.
It also includes reducing customs duty to 2.5% on petrol and diesel and on ATF and fuel oil, bitumen, wax and LSHS to 5% under the first option. Under the second option, duty is to be brought down to 5% for petrol and diesel from 7.5% and on other product s to 7.5% from the existing 10%.
“The increase in excise duty on ATF with simultaneous reduction in customs duty would mean that refineries will have less protection since they charge import parity price
though it would mean increase in the government revenue,” said an official.
Public sector oil companies that sell ATF in the domestic market may not like this though it may have little impact on private refiners.
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