Diesel prices in seven states including Assam, Bihar, West Bengal and Maharashtra have been increased, while in 11 states including Karnataka, Goa, Gujarat, and Odisha, the prices have been reduced.
The increase of up to Rs 1.95 a litre and the reduction of up to 62 paise a litre in diesel retail prices is due to revision in ‘irrecoverable’ state levies. The revision is effective today, Indian Oil Corporation said in a statement.
Kerosene prices sold under public distribution system have been reduced in nine states, domestic LPG in 12 states, and petrol in 11 states. Similarly, the prices of kerosene have been increased in eight states, domestic LPG in six states and petrol in seven states.
'The Irrecoverable Taxes Compensation Scheme'
In January 2003, the Union Government had notified ‘The Irrecoverable Taxes Compensation Scheme, 2002’ to compensate the oil companies for irrecoverable state taxes to facilitate smooth transition from the administered pricing regime to the market determined pricing scheme.
The scheme provides for compensation to oil marketing and refining companies in respect of irrecoverable state taxes levied by the states/ local authorities such as entry tax on crude, surcharge on sales tax, CST/purchase tax on inter-company sales of petroleum products and any other irrecoverable taxes.
The compensation was set off with the amount being collected by the oil marketing companies through the consumer selling price under the head ‘State Surcharge’ for the period 2002-03.
'State Surcharge'
The surcharge element in the price build-up ensured that the incidence of any irrecoverable tax of the particular state was recovered from the respective state. The rate of ‘State Surcharge’ has remained unchanged since then.
According to IOC statement, the scheme will be reviewed on quarterly basis by the oil companies and the required changes will be made in the State Specific Cost.