Bring down taxes on petroleum products: Govt to states

New Delhi : State governments have been requested to bring down state taxes on petroleum products, said Minister of State for Petroleum & Natural Gas Jitin Prasada here on Tuesday.

Prasada informed the Rajya Sabha in a written reply that State level taxes form a significant part of the retail-selling price of petrol.

Whenever basic prices of petroleum products are increased, the ad-valorem rates of taxes have a cascading effect on the retail selling prices, the Minister said.

Ministry of Petroleum and Natural Gas has requested the State Governments to consider bringing down the incidence of State taxes on petroleum products to provide relief to the consumers, said Prasada.

He also informed that at an average crude oil price of $75 per barrel during 2010-11, the under recoveries on petrol were projected to be Rs. 7,000 crore for the year 2010-11.

As a result of aligning the price of petrol to the market, the under-recoveries of the public sector Oil Marketing Companies (OMCs) on petrol are now confined to Rs. 2227 crore, which occurred during the period 1st April 2010 to 25th June 2010.

Subsequent to the decontrol of petrol pricing, the oil companies are free to take appropriate decisions on the pricing of petrol on the basis of international oil prices, market conditions and commercial considerations.

The Minister added that with effect from 26th June 2010, the de-control of price of petrol both at the refinery gate level as well as the retail level is in accordance with the recommendations of the Kirit Parikh Committee Report.

An expert group under the chairmanship of Kirit S. Parikh to advice on a viable and sustainable system of pricing of petroleum products was constituted by the Government.

As regards the price of diesel, Government has taken a decision ?in principle? that the price of diesel will be made market-determined, both at refinery gate and retail level.