Tuesday, 12 June 2012

Govt may slap Rs 1.7 lakh tax on small diesel vehicles and Rs 2.55 Lac on bigger cars

The government plans to slap additional levies of Rs 170,000 on small diesel cars and Rs 255,000 on medium and large diesel vehicles to check dieselization of economy due to wide gap between petrol and diesel prices. 

"The oil ministry has asked the finance ministry to impose additional excise duty on diesel cars and the matter is under consideration," a government official said. 

Oil ministry officials confirmed that its proposal was "favourably" considered. "The money thus raised could be used to meet part under-recoveries (revenue losses of state oil firms in selling fuels below market rates)," an oil ministry official said. 

The government expects that the levy would help it in meeting about Rs 10,000 crore annual revenue losses of state oil firms in selling diesel below market rates. 

Indian Oil CorpBharat Petroleum and Hindustan Petroleum had lost about Rs 81,000 crore revenues in 2011-12 due to a freeze in diesel rates. 

Diesel price is frozen in the country for almost a year due to political reasons and it is almost 74% cheaper than petrol, which is a major disincentive for buying petrol vehicles. 

Diesel is sold at Rs 40.91 a litre in New Delhi, more than Rs 30 a litre cheaper than petrol. 


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