Industry & Economy
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Petroleum
Specific duties proposed on unbranded petrol, diesel
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Customs exemption on naphtha for polymers scrapped
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Our Bureau
New Delhi, Feb 29 The Budget proposal to adopt a pure specific excise duty on unbranded auto fuels – petrol and diesel – would mean that the Finance Ministry will no longer reap tax windfall from future increase in prices of these products.
The proposal to convert ad valorem plus specific rate on unbranded petrol and diesel to pure specific rate would also check the cascading effect of duties in the event of a future price rise on the oil retailers.
The Finance Minister, Mr P. Chidambaram, in his Budget proposal for 2008-09 said “in order to remove a source of misinformation, I propose to abolish the ad valorem part of the excise duty on unbranded petrol and unbranded diesel and replace the same by an equivalent specific duty of Rs 1.35 per litre. Henceforth, there will be only a specific duty of Rs 14.35 per litre on unbranded petrol and Rs 4.60 per litre on unbranded diesel. There will be no impact on retail prices.”
However, the branded fuels such as Extra Premium, Speed and Power will continue to attract the present ad valorem-cum specific rates.
Another proposal that is expected to help the sector is reduction in customs duty on project imports from 7.5 per cent to 5 per cent. This would help reduce the project cost for new refineries, pipelines and oil and gas fields development.
While giving some benefits, the Finance Minister has withdrawn the five per cent customs duty exemption on import of naphtha by manufacturers of polymers. This would result in increase in cost of production for those in petrochemicals business.
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