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NEW DELHI: The move to cut taxes on petrol and diesel by central and state government is timely and will help revive the economy, enabling businesses to pass on their savings on energy costs to consumers, the Confederation of Indian Industry (CII) told Mint on Monday.

"The reduction in levies at the central and states level is a timely intervention which will go a long way towards reviving the economy. Industries will be able to reduce logistic and energy costs and benefits from that can be passed directly on to consumers," said Sashi Mukundan, chairman of CII’s hydrocarbon committee. Mukundan is also president at BP India and senior vice president at the BP group.

Following the Centre’s announcement of lowering excise duty on petrol by 5 and on diesel by 10, as many as 22 states and union territories have cut value added tax on the auto fuels, the petroleum ministry said last Friday. Experts expect the move to cool inflation and help boost consumption.

Inclusion of key petroleum products in Goods and Services Tax (GST) is high on the wish list of industry as it would help reduce cascading of taxes.

“Rationalising the tax structure on petroleum products by bringing petroleum products such as natural gas and aviation turbine fuel (ATF) under the ambit of GST in a phased manner, will amongst other efficiencies, enable both Centre and states to have an integrated tax structure. The current reduction has come at an opportune moment as consumer spending is increasing and demand is on the uptick," Mukundan said.

“The hydrocarbon sector is a significant contributor to the nation’s economy and I am confident that the government will continue with its supportive reforms to grow this sector," he said in the statement

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