SCRAPPING OF VAT EXEMPTION

Petrol has become dearer in Delhi by 32 paise a litre from Wednesday. Sources said that petrol prices have risen only in Delhi due to withdrawal of the value-added tax (VAT) exemption. It will now cost Rs 67.56/litre in the Capital.

The Union Government has instructed the public sector oil marketing companies to pass on to the customers any change in tax by State Governments. “Therefore, the companies have been revising retail prices,” sources added.

Petrol is a deregulated product, hence, the companies are free to revise its retail prices. Since November, the prices have seen changes in Mumbai and Kolkata. Petrol retail prices in the two cities were brought into effect from January 1.

However, the attention now is on whether the Government will revise the price of regulated products – domestic LPG, PDS kerosene and the popular auto fuel diesel. Any movement in the prices of these products has strong political implications, resulting in the Government treading very cautiously.

Earlier, on Wednesday, at the Oil & Gas Conservation Fortnight 2013 event here, Petroleum Minister M. Veerappa Moily said that based on the recommendations of the Kelkar Committee, the Government was seriously considering revising rates of diesel and domestic LPG and PDS kerosene, “but no decision has been taken as yet”.

He refused to comment on whether the price issue or raising the cap on subsidised domestic LPG would be discussed by the Cabinet this week. “What the Cabinet will discuss... we can’t disclose,” he said.

There is a strong buzz that the Petroleum Ministry is pushing for increasing the price of subsidised domestic LPG by almost Rs 100/cylinder either in phases or at one go.

At present, the Government has capped subsidised domestic LPG at six per cylinder for each household annually. It is available at Rs 410.50/cylinder (Delhi rate). There is a demand to increase this cap to nine. However, political circles say a section is pitching for increasing the cap to 12 cylinders.

For diesel and kerosene, the proposal is to follow the Kelkar Panel recommendation and increase the price. The panel has suggested raising the diesel price by Re 1 a litre every month for next 10 months.

On kerosene price, the panel has suggested Rs 10 a litre in phases over two years.

The corridor buzz is that for diesel, the Petroleum Ministry has suggested that the price could be increased by Rs 1.5 a litre every month till March 31, 2013.

Another suggestion, according to reports, is to increase the price in such a way that the loss incurred by public sector oil retailers for selling it at controlled rates is neutralised.

richa.mishra@thehindu.co.in

aesha.datta@thehindu.co.in

(This article was published on January 16, 2013)
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