The Narendra Modi-led Government on Monday disappointed India Inc and the masses by not announcing any measures to provide relief to the Covid-19-affected economy. However, it did manage to get approval from the Lok Sabha for enabling powers to raise  duty on petrol and diesel in future.

Meanwhile, Finance Minister Nirmala Sitharaman also moved an amendment in the Finance Bill to define threshold for taxation on Non-Resident Indians (NRI). The Finance Bill  was passed in the Lok Sabha without any debate or reply.

Fuel taxation

In an amendment in the Finance Bill, the upper limit for special additional excise duty on petrol is fixed at ₹18 while  on diesel it  is ₹12. At present, petrol attracts special additional excise duty at the rate of ₹10 per litre while for diesel, it is ₹4. Similarly, another enabling provision in the Bill is  on raising Road and Infrastructure Cess on petrol and diesel to ₹18 a litre. At present, this levy is ₹10 a litre on each of the product.

The increase in levy will help States the most as the base for calculation of sales tax will also rise. States levy sales tax on ad valorem basis which means a certain share of the base value, while the Centre applies principle of specific duty. This means an increase in crude oil prices will not exactly result in higher revenue for the Centre but will benefit the States. While the revenue earned by the Centre by way of special additional excise duty will need to be shared with the States, the cess need not be shared.  Though government sources ruled out any increase in fuel levies in the near term,  the enabling provision will help the government raise money as and when required and when crude prices dip.

A rough calculation estimates additional income of ₹13,000 per annum, if the levy is raised by ₹1 a litre. Meanwhile, there is feeling that the government will not get to exercise the enabling provision in the coming months as consumption of fuels has gone down even though crude price has slipped to below $30 level.

NRI taxation

Meanwhile, an amendment in the Finance Bill will bring some relief for the NRIs. “An individual being a citizen of India with total income, other than the income from foreign sources, exceeding ₹15 lakh during the previous year shall be deemed to be resident in India in that previous year, if he is not liable to pay tax in any other country or territory by reason of his domicile or residence or another criteria or similar nature,” the amendment read.

The amendment has fixed the threshold  at ₹15 lakh for NRIs who do not pay any tax in any jurisdiction and have income arising within India too. It means those with income up to ₹15 lakh and not paying tax abroad, will not be required to pay tax here. This will mostly benefit people working in West Asia.

These two were among the 40 amendments moved by the Finance Minister. Against the backdrop of the coronavirus outbreak, Minister of State for Parliamentary Affairs Arjun Ram Meghwal said it was an “extraordinary situation” and that a decision to pass the Bill without any discussion was taken at the all-party meeting.

As Sitharaman was moving various amendments to the Bill, Congress leader in the House Adhir Ranjan Chowdhury and DMK leader TR Baalu tried to intervene as they wanted to know about a financial package for sectors impacted by the coronavirus outbreak. The Bill, with all the amendments moved by the government, was passed by the House.

Later in the evening, the Rajya Sabha returned the Bill.  The Bill will now  go to the President for his assent and once done,  will become a law.

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