In recent times, the price of fuel in India has come down considerably, the reason is falling prices of crude oil in the international market. However, the full benefit of the crude oil price reduction has not been passed to the retail customers by the government who has imposed new taxes on the fuel.
In 2011, the mounting prices of crude oil in the international market forced the government to scrape the custom duty on crude oil import but now that the international price of the crude oil is sliding southwards, government may bring back the custom duty which may help exchequer to rope-in around Rs. 14,000 crore helping the government to meet the target of 3.6 per cent of GDP which is deficit in the year 2015-2016. The crude oil prices are expected to fall further and government may take the opportunity to fill in the deficit balance. The custom duty is three per cent on crude oil, which may make a comeback.
Even though fuel prices have come down substantially since last budget, the price of crude oil has come down more relatively. Lower fuel prices would help getting the prices of commodities and food down and the cost of living would come down substantially.
There are big chances that the government may introduce special tax benefits for the hybrid vehicles with the new budget that would help bringing down the fuel needs of India.
There are many new oil fields that are being discovered in the Indian territory, the new oil fields will help India to reduce the crude oil import. India is one of the biggest importers of the crude oil in the world and with the rising economy and development, the demand is set to ride. If government brings back the custom taxes on crude oil, a new source of revenue would open.
Petrol’s Pricing Structure:
1. Fuel Component-52% 2. Customs Duty – 4% 3. Excise Duty -25% 4. Sales VAT -17% 5. Dealer Commission-2%
Diesel’s Pricing Structure:
1. Fuel Component-66% 2. Customs Duty – 7% 3. Excise Duty -13% 4. Sales VAT -12% 5. Dealer Commission-2%
This is how the petrol and diesel prices are structured in India. These taxes are set by different state governments and an uniform tax on the fuel is set by the central government. The original fuel price is around 50 - 60 per cent of the retail price.
