NEW Delhi, February 28 (PTI): Petrol and diesel prices look set to be hiked after Finance Minister Pranab Mukherjee ignored calls for its reduction in customs and excise duty to contain the impact of spurt in global crude oil prices that have touched a two year high of USD 110 per barrel. Mukherjee in his Budget for 2011-12 left customs duty on crude oil unchanged at 5 per cent and that on petrol and diesel untouched at 7.5 per cent. Excise duty on petrol will remain at Rs 14.35 a litre and diesel at Rs 4.60 per litre.
In fact, he refrained from mentioning the impact of rising crude oil prices on an economy which is 75 per cent dependent on imported oil to meet its energy needs. State-owned IOC, BPCL and HPCL are currently losing about Rs 2.25 a litre on petrol, a fuel that was freed from government control in June last year. Oil firms had withheld raising petrol prices in anticipation of a cut in customs and excise duty in the Budget for 2011-12. Similarly, the oil firms currently sell diesel at Rs 10.74 per litre lower than imported cost and in absence of a duty cut, an increase in prices is the only option left to meet rise in cost of raw material (crude oil).
Oil Minister S Jaipal Reddy had last week stated he would take the case for an auto fuel price hike to an Empowered Group of Ministers (EGoM) headed by Mukherjee after the Budget. The timing of the hike remains to be seen as the government may be jittery of raising prices when Parliament is in session. The Budget session of parliament goes for a 3-4 week break from March 18 and rates may be hiked then. Besides petrol and diesel, the oil firms lose Rs 21.60 a litre on PDS kerosene and Rs 356.07 per 14.2-kg domestic LPG cylinder. The only other way to avoid a fuel price hike would have been higher government subsidy. But Mukherjee has provisioned only Rs 23,640 crore in 2011-12 as oil subsidy, lower than Rs 38,386 crore of current fiscal.
The budgetary provision for the purpose during 2011-12 will be less than one-fourth of the projected Rs 1,05,000 crore revenue loss that state oil firms anticipate on selling diesel, domestic LPG and kerosene next fiscal. The revenue loss projected for 2011-12 fiscal is higher than Rs 1,03,292 crore under-recovery in 2008-09 when global crude oil prices had touched USD 147 per barrel. Of this, the government provided Rs 71,292 crore in cash and to contain impact also lowered customs duty on crude to zero and that on products to 2.5 per cent. At current prices, the oil firms are projected to lose Rs 76,559 crore in the current fiscal, half of which is to come from government by way of cash compensation. Further, one- third would be contributed by upstream firms like ONGC and the remaining absorbed by oil marketing firms.
In fact, he refrained from mentioning the impact of rising crude oil prices on an economy which is 75 per cent dependent on imported oil to meet its energy needs. State-owned IOC, BPCL and HPCL are currently losing about Rs 2.25 a litre on petrol, a fuel that was freed from government control in June last year. Oil firms had withheld raising petrol prices in anticipation of a cut in customs and excise duty in the Budget for 2011-12. Similarly, the oil firms currently sell diesel at Rs 10.74 per litre lower than imported cost and in absence of a duty cut, an increase in prices is the only option left to meet rise in cost of raw material (crude oil).
Oil Minister S Jaipal Reddy had last week stated he would take the case for an auto fuel price hike to an Empowered Group of Ministers (EGoM) headed by Mukherjee after the Budget. The timing of the hike remains to be seen as the government may be jittery of raising prices when Parliament is in session. The Budget session of parliament goes for a 3-4 week break from March 18 and rates may be hiked then. Besides petrol and diesel, the oil firms lose Rs 21.60 a litre on PDS kerosene and Rs 356.07 per 14.2-kg domestic LPG cylinder. The only other way to avoid a fuel price hike would have been higher government subsidy. But Mukherjee has provisioned only Rs 23,640 crore in 2011-12 as oil subsidy, lower than Rs 38,386 crore of current fiscal.
The budgetary provision for the purpose during 2011-12 will be less than one-fourth of the projected Rs 1,05,000 crore revenue loss that state oil firms anticipate on selling diesel, domestic LPG and kerosene next fiscal. The revenue loss projected for 2011-12 fiscal is higher than Rs 1,03,292 crore under-recovery in 2008-09 when global crude oil prices had touched USD 147 per barrel. Of this, the government provided Rs 71,292 crore in cash and to contain impact also lowered customs duty on crude to zero and that on products to 2.5 per cent. At current prices, the oil firms are projected to lose Rs 76,559 crore in the current fiscal, half of which is to come from government by way of cash compensation. Further, one- third would be contributed by upstream firms like ONGC and the remaining absorbed by oil marketing firms.
Domestic air travel to become more dearer
New Delhi, February 28 (PTI): Domestic air travel will cost more from the next financial year with the government raising service tax on it by Rs. 50 and Rs. 250 for domestic and international journeys respectively. Presenting the 2011-12 Budget in the Lok Sabha, Finance Minister Pranab Mukherjee also proposed to tax travel by higher classes on the domestic sector at the standard rate of 10%. The hike in service tax on air travel would be effective from April 1.
From then on, the tax on economy class domestic travel would stand at Rs. 150 instead of the current Rs. 100 and Rs. 750, as against Rs. 500, for international travel. Domestic travel on business or high class would attract a flat service tax of 10% of the fare. This would bring domestic air travel on higher classes on par with international journeys by the same classes, Mr. Mukherjee said. However, there was relief to Air India as the Finance Minister made a budgetary support of Rs. 1,200 crore to the ailing national carrier as additional equity infusion. This would be the third tranche of equity for Air India, which received Rs. 800 crore and Rs. 1,200 crore respectively in the 2009-10 and 2010-11 budgets.
A total expenditure of Rs. 2,393.88 crore, both plan and non-plan, has been proposed for the Civil Aviation Ministry in the budget. The services being provided within an airport under the ‘works contract’ for specified purposes was being exempted, the Explanatory Memorandum said. The value of air freight included in the assessable value of goods for charging customs duties is being excluded from taxable value for levy of service tax under the ‘transport of goods by air’ service, it said.
From then on, the tax on economy class domestic travel would stand at Rs. 150 instead of the current Rs. 100 and Rs. 750, as against Rs. 500, for international travel. Domestic travel on business or high class would attract a flat service tax of 10% of the fare. This would bring domestic air travel on higher classes on par with international journeys by the same classes, Mr. Mukherjee said. However, there was relief to Air India as the Finance Minister made a budgetary support of Rs. 1,200 crore to the ailing national carrier as additional equity infusion. This would be the third tranche of equity for Air India, which received Rs. 800 crore and Rs. 1,200 crore respectively in the 2009-10 and 2010-11 budgets.
A total expenditure of Rs. 2,393.88 crore, both plan and non-plan, has been proposed for the Civil Aviation Ministry in the budget. The services being provided within an airport under the ‘works contract’ for specified purposes was being exempted, the Explanatory Memorandum said. The value of air freight included in the assessable value of goods for charging customs duties is being excluded from taxable value for levy of service tax under the ‘transport of goods by air’ service, it said.
