Petro tax review ordered to verify OMC loss figures
During a debate on the demand for a parliamentary nod for an extra R28,500 crore for the OMCs on Friday, finance minister P Chidambaram said he was looking into the taxes on petroleum products. Chidambaram said when he would stand up to present the 2013-14 Budget, he may be better placed to spell out a blueprint for fiscal consolidation.
One of the issues that the discussion of parliamentarians as well as the ministry’s review would be addressing is whether taxes have an impact on the losses calculated by fuel retailers that, in turn, has a bearing on government subsidy.
There has been criticism that the basic customs duty on petrol and diesel gets built into the marketing loss calculations of the two auto fuels although these are not imported but are produced at local refineries. Crude oil attracts only a Rs 50-a-tonne national calamity contingency duty (NCCD) and no basic customs duty. However, both petrol and diesel attract a 2.5% basic customs duty and a 3% education cess. That is the effective tariff protection given to domestic refineries against any possible import of finished petroleum products. Only state-run refineries get that protection as private refiners currently do not retail fuel in India due to strict price regulation.
Experts say the marketing losses of public refiners are questionable because they use the trade parity prices (weighted average of 80% import and 20%
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