The Maharashtra government may increase excise duty on Indian-made foreign liquor (IMFL) to compensate for a possible cut in tax on petrol and diesel. There has been no increase in duty on the Indian-made foreign liquor since 2013. The government may impose more tax on the IMFL if fuel prices keep on increasing at this rate. "The idea is to increase the excise duty on IMFL, especially on the largely consumed mid-segment liquors, so that government would earn more revenue. Then we can reduce taxes on petrol and diesel and counter the criticism (of soaring fuel prices)," PTI quoted an official as saying. However, the government increased excise duty on country liquor and canteen liquor, and beer in 2015 and 2017, respectively.
States like Andhra Pradesh, Rajasthan, West Bengal and Karnataka have cut taxes on fuel to reduce the burden, but the central government has so far not done so. The Centre currently levies a total excise duty of Rs 19.48 per litre on petrol and Rs 15.33 per litre on diesel, while VAT varies amongst states. If the Modi government reduces excise duty on petrol and diesel by Re 1, it stands to lose Rs 14,000 crore in revenue, which would put a huge dent on its fiscal deficit target of 3.3 per cent of the GDP, says an estimate.
Meanwhile, petrol prices increased by 10 paise in both Delhi and Mumbai on Friday. In Delhi, petrol is now sold at Rs 82.32 per litre, while diesel has seen no change at Rs 73.87 per litre. In Mumbai, petrol has reached Rs 89.92, while diesel has taken 10-paise jump to Rs 78.56 per litre. Although prices are different in each district of Maharashtra, petrol is being sold at over Rs 90 per litre in several areas. Fuel prices are not uniform across the country due to variable state taxes. In Chennai, petrol is sold at Rs 86.01 while diesel has crossed Rs 78 per litre. In Kolkata, petrol has taken 53 paise jump from Thursday to Rs 84.60, while diesel is priced at Rs 76.12.
Amid growing US pressure on cutting oil supply from Iran, the Chennai Petroleum Corporation Limited, a Group company of state-owned Indian Oil Corporation, has decided to stop processing Iranian crude oil from October to keep its insurance coverage once new sanctions by the United States against Iran go into effect, reported Reuters. Iran's Naftiran Intertrade Co Ltd, a trading arm for state-owned National Iranian Oil Co, owns a 15.4 per cent stake in Chennai Petroleum, which has two refineries with a total combined capacity of 230,000 barrels of oil per day (bpd), added the report.
The government is expected to soon announce import curbs by increasing customs duty on several 'non-essential items' to ease the pressure on falling value of rupee and to keep the widening Current Account Deficit (CAD) on a check. This could also have some impact on the ever-increasing oil prices.
Meanwhile, crude oil international benchmark Brent Crude was priced at $78.71 per barrel on Friday, while WTI Crude Oil hovered around Rs 70.80 per barrel.
Edited by Manoj Sharma