Fuel Prices: Center Finally Responds To Common Man’s Plight

Fuel Prices: Center Finally Responds To Common Man’s Plight

Fuel Prices: Center Finally Responds To Common Man’s Plight

In a press briefing, Finance Minister Arun Jaitley said that the Centre will cut Rs 1.50 in excise duty on fuel while an additional Re 1 will be absorbed by the Oil Marketing Companies (OMCs).

The central government will bear a revenue loss of around Rs 10,500 crore due to today's cut in excise duty on petrol and diesel prices.

Taxes on petrol and diesel, which account for more than a third of retail fuel prices, are one of the biggest sources of income for the government, which is seeking to keep the country's budget deficit in check.

Welcoming the decision of the Central government, Haryana Finance Minister Abhimanyu said the Haryana government has also chose to reduce Value Added Tax (VAT) on petrol and diesel by about Rs 2.50 per litre, reported IANS. Notably, central and state taxes and levies amount to more than the cost it takes to manufacture motor fuel. However, India's domestic indicators are quite strong and stable. Banerjee claimed that fuel prices were reduced in the worldwide market and asked why these were increasing in the country.

Jammu and Kashmir, which is now under Governor's rule, also announced a reduction of Rs 2.50 on fuel prices.

So far, 11 States have joined the Centre in cutting their tax rates on petrol and diesel by ₹2.5 per litre, with BJP president Amit Shah saying that all BJP-led States have agreed to implement the rate cuts.

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The relief to consumers will be in three parts - centre will cut excise duty by Rs 1.5, and oil marketing companies (OMCs) will factor in Re 1 in their pricing, and states have been asked to cut Value-Added Tax as they have raked in windfall gains due to ad valorem nature of the levy that results in higher realisation whenever rates move up, he said. Prices have seen a similar hike in other cities as well.

Karnataka chief minister HD Kumaraswamy said he would not reduce taxes on fuel.

The Minister also maintained that Thursday's decision does not represent a re-regulation of fuel prices.

The RBI said that the state-owned oil companies can raise external commercial borrowings (ECBs) for working capital with minimum average maturity of 3-5 years and they don't have to mandatorily hedge all ECBs.

In New Delhi, petrol prices rose by 15 paise to Rs 84 a litre while diesel prices increased by 20 paise to Rs 75.45 per litre.

However the opposition-ruled states refused to toe the Centre's line. Brent crossed $86 per barrel and this is the highest in the last four years. The total impact of the excise duty cut on us for the entire fiscal would have been Rs 21,000 crore.

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