Central government won't cut taxes to cushion fuel prices

The Central government is not considering providing relief to the consumers by reducing duties on fuel.

Finance Secretary Hasmukh Adhia on Monday said, "The government is not going to review the duties on petrol and diesel as of now. Whenever we do it, we will let you know," ruling out a reduction in excise duty to cushion the impact of rising international oil prices.

Petrol prices have surged to a four-year high of Rs 73.83 per litre in Delhi, while the diesel rates touched an all-time high of Rs 64.69, renewing demand for the government to cut excise tax rates on fuel.

Earlier in the day, Oil Minister Dharmendra Pradhan said the government is keeping a close watch on international prices, but there is no going back on free market pricing mechanism. He said that consumer will benefit if the petrol and diesel prices are brought under GST at the earliest. "We are concerned. We are keeping a close eye on the developing international oil scenario," he said.

Domestic fuel prices have been on the rise after international crude prices jumped from $48 per barrel in June 2017 to $69.41 per barrel now. State-owned oil firms on Monday raised petrol price by 10 paise per litre and diesel by 11 paise. The oil firms have been revising fuel prices daily since June last year.

Both the Centre and the states find it difficult to cut excise and VAT as it will reduce their revenues. The states are also not in favour of bringing petrol and diesel under the GST ambit as it will impact their revenues.

"Centre and states bank on tax revenues to meet developmental needs. As much as 42% of collections goes to the states and out of the remaining, 60 per cent is used to fund Centre's share," Pradhan said.