New Delhi: With a view to limit revenue loss on sale of petrol and diesel, Finance Minister P Chidambaram on 29 February proposed to levy specific excise duty on un-branded auto fuels, but this will not translate into a price cut as the rates fixed are at par with current levies.
The move to convert ‘ad valorem plus specific rate’ on petrol and diesel sold without a brand name to pure ‘specific rate’ would, however, help retailers limit their revenue losses in future as the cascading effect of duties in the event of price rise has been checked.
Chidambaram presenting the last full-year budget before the general elections, said unbranded petrol that currently attracts 6% ad valorem excise rate plus Rs13 a litre fixed duty, would be charged Rs14.35 a litre specific excise duty.
Similarly, un-branded diesel that attracts 6% ad valorem rate plus Rs3.25 fixed duty would be charged a specific excise levy of Rs4.60 per litre.
However, branded fuels like Indian Oil’s Extra Premium, Bharat Petroleum’s Speed and Hindustan Petroleum’s Power will continue to attract the present ad valorem cum specific rates.
Chidambaram reduced customs duty on project imports from 7.5% to 5%, a move that would help cut project cost at new refineries, pipelines and oil/gas fields developments.
He withdrew 5% customs duty exemption on import of naphtha by manufacturers of polymers, resulting in increase in cost of production of Haldia Petrochemicals. Reliance Industries too would be impacted marginally as it was also importing small quantities of naphtha.