Deora for excise cut on diesel

New Delhi, Jan 22 | Updated: Jan 23 2007, 07:45am hrs
Petroleum minister Murli Deora will press for an excise duty cut on diesel when he meets finance minister P Chidambaram on Tuesday to rein in run away inflation rate, which at 6.12% is at a two-year high. Transportation cost has a cascading effect on prices of commodities. Since most of goods are moved on diesel trucks, a case for a excise duty cut on diesel will be made when Deora meets Chidambaram to present pre-budget memoranda, an official source said.

The petroleum minister was seeking a shift to specific duties on fuel from the current mix of ad-valorem and specific duties. The current excise duty on petrol is 8.16% of ex-factory price plus Rs 13.26 a litre, while for diesel it is 8.16% plus Rs 3.32 a litre. The ministry has suggested a specific duty of Rs 15.92 for petrol and Rs 6.08 a litre for diesel in the forth coming budget. The official said the ministry had also proposed inclusion of diesel in the list of declared goods. This would mean the fuel attracts a uniform state sales tax rate of 4% instead of present dispensation of rates as high as 29%. In the last Budget, the finance minister had included LPG in the list of declared goods.

The ministry also wanted the Rs 2,500-a-ton cess collected on domestic crude oil to be used for funding the subsidy on PDS kerosene and domestic LPG. While Rs 5,000 crore is collected as cess every yearwith cumulative collection of over Rs 61,000 crore until 2005-06only Rs 902 crore has been made available for use by the oil industry, the official said. Petroleum ministry will also demand infrastructure status for oil and gas exploration business and pipelines to encourage prospecting in unexplored basins.