Financial Daily from THE HINDU group of publications
Friday, Mar 21, 2003
Financial Daily from THE HINDU group of publications Friday, Mar 21, 2003 |
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Taxation Industry & Economy - Petroleum Tax makes petrol dearer Raghuvir Srinivasan
CHENNAI, March 20 RISING global crude oil prices alone are not responsible for the high price you pay for petrol and diesel today. Taxes are as much to blame. Do you know that taxes and duties account for well over half of the dear price you pay for petrol and a third of the price of diesel in the country? A study of the pricing structure for the two fuels in the country is revealing. For example, in Mumbai, of the Rs 38.59 per litre that Mumbaikars pay for petrol, as much as Rs 22.76 or about 59 per cent is appropriated by the Government. In other words, but for taxes, you could buy petrol for as little as Rs 16.06 per litre if you are in Mumbai. The Centre takes away Rs 12.32 as excise and additional excise duties from Mumbaikars for every litre of petrol that they buy while the State Government appropriates a further Rs 10.44 per litre. In the case of diesel, taxes and duties account for 42 per cent or Rs 11.83 for every litre that costs Rs 27.88 in Mumbai. In comparison, taxes and duties account for just 26 per cent of the price of petrol and 29 per cent of diesel in the US. Despite all the uproar over rising fuel costs, petrol in the US still costs about Rs 20.18 per litre only (42 cents @ Rs 47.64 to the dollar) while diesel costs about Rs 20.68 per litre (43 cents). Among the four metros in India, petrol and diesel are taxed the most in Mumbai; petrol suffers a sales tax of 30 per cent and surcharge of Re 1 a litre while diesel is taxed at 34 per cent with a similar surcharge. The situation is much the same for the two fuels across the country, with the average tax being about 55 per cent of the final price of petrol and about 33 per cent for diesel. Delhi seems to be the most benign amongst the four metros, with a sales tax of 20 per cent on petrol and 12 per cent only on diesel. The State also does not have any surcharge. A large part of the higher excise duty on petrol is because of the Rs 6 per litre special duty imposed by Mr Yashwant Sinha in the 2002-03 Budget and the Rs 1.50 per litre cess (including 50 paise in this year's Budget) for road development. At the top of the pile India ranks up there in the list of countries that charge high taxes and duties on the two fuels. Amongst its peers is the UK where taxes and duties make up 77 per cent of the selling price of unleaded petrol and France and Greece with 74 per cent and 56 per cent, respectively.
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