Cut taxes on petro products, Centre to follow: FM to states

In order to give relief to customers reeling under high prices of petrol, Finance Minister Pranab Mukherjee today said Centre is willing to temporarily cut duties if the states agree to take similar steps.

"... I have suggested to them (states chief ministers) that if you agree to reduce the tax burden temporarily say till crude prices come to USD 90 per barrel, Union government is ready to reduce duties," he said at an Assocham conference on financial sector here.

Mukherjee further said central and state taxes account for 50% of the price which retailers pay. Pointing out that taxes on petroleum products are an important source of revenue for the Centre and the states, the Minister said, "when situation is difficult, difficulties have to be shared by all stakeholders. It can not be passed on to  only one stakeholder, otherwise there will be serious distortions."

Last month, Oil Marketing Companies (OMCs) had raised prices of petrol by Rs 7.54-per-litre in view of the rising prices of crude in the international market and rupee depreciation. Later, on June 3 the oil firms had cut petrol rates by Rs 2.02 a litre.

There is likelihood of further cut in prices as the international crude oil price for Indian basket declined to USD 95.97 per barrel on June 14. In June last year, after raising prices of diesel, LPG and kerosene, the Centre has slashed customs and excise duty on petroleum products to provide a cushion to the consumers against the hike.