Keypoints:
- Finance ministry has started with consultations with some stated along with oil companies and oil ministry to lower the tax burden.
- Tax and duties amounts for 60% of retail price of petrol and diesel in the country, world’s biggest consumed of crude oil.
India’s finance ministry considers to remove taxes on petrol and diesel in order to reduce record high domestic prices. Amid the COVID pandemic hitting India’s economic activity, Prime Minister Modi’s raised taxes on petrol and diesel twice in the last 1 year in order to boost sagging tax revenues instead of passing the benefits of low prices last year to consumers.
“We are discussing ways in which prices can be kept stable. We will be able to take a view of the issue by mid-March,” said one of the sources.
The sources also said that the government wants oil prices to stabilise before cutting taxes, as it does not want to be forced to change the tax structure again, should crude prices rise further.
Recently, India’s Finance Minister Nirmala Sitharaman said that,””I can’t say when we will reduce taxes on fuel, but (the) centre and states have to talk to reduce fuel taxes”.
“There is an expectation that OPEC+ would agree to ease oil output curbs, we hope oil prices will stabilise after their decision,” the source said.
In March and April, ahead of state assembly polls, the image of PM Modi could be affected due to the price rise.
BJP and PM Modi is already facing biggest challenge with the farmers protesting against the newly introduced agricultural laws.
During this fiscal year, contributions from the sector were about 4.21 trillion rupees, despite a significant decline in local fuel demand, the data showed.
