Budget '11: FM ignores calls for duty cut on petrol, diesel
No changes in taxes have been proposed by the finance minister this budget, which will be a negative for bleeding oil marketing companies.
February 28, 2011 / 17:22 IST
The rapid rise in demand for oil is attributable to a buoyant global economic recovery. With demand expected to remain strong, crude prices are expected to remain high going forward, a negative for downstream oil companies. The sword of uncertainty over subsidy sharing continues to hang over oil marketing companies, which is expected to hurt them significantly in revenue losses.
Oil marketing companies are expected to end the fiscal with Rs 80,000 crore of losses on sale of diesel, LPG and kerosene below cost as compared to Rs 44,000 crore in 2009-10.No measures announced this budget:However, no changes in taxes have been proposed by the finance minister this budget, which will be a negative for bleeding oil marketing companies. An increase in minimum alternate tax to 18.5% will further impact companies like Reliance Industries, ONGC and Cairn, which will now have to pay more tax on production.The budget was an overall negative for oil and gas companies as no clarity emerged on reduction in taxes or any sops for PSU oil marketing companies. Import duties on crude, which are currently at 5% have not been done away with or reduced. Excise duty on petrol will remain at Rs 14.35 per litre while that for diesel will continue at Rs 4.60 per litre. This would further burden oil marketing companies to reduce their underrecoveries in the subsidy sharing mechanism. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
