The Center imposes additional taxes on gasoline and diesel exports; increases import duties on gold
In a bid to address the fuel shortage problem in the country, the government on Friday imposed a special additional excise duty on the export of gasoline and diesel.
This decision will not only bring more revenue to the national treasury, but will also discourage companies from exporting gasoline and diesel, and thus help ease the fuel situation in the domestic market.
Private oil marketing companies exported gasoline and diesel to foreign countries like Australia for better fulfillment.
“As exports are becoming very profitable, we see that some refiners are drying up their pumps on the domestic market. With this in mind, taxes equal to Rs 6 per liter on petrol and Rs 13 per liter on diesel were imposed on their exports. These suspensions would apply to all diesel and gasoline exports from the country,” the government said in a statement.
While the move would help alleviate fuel shortages at pumps across the country, it would impact the bottom line of these companies. After the news, Reliance Industries Ltd fell more than 7% on BSE to close at Rs 2408.95 on Friday.
The shortage of fuel at retail outlets was due to the fact that oil marketing companies were unwilling to sell fuel at a loss, as fuel prices did not rise despite rising crude and the depreciation of the rupee – these two factors led the oil marketing companies to lose 20 to 25 rupees per litre. on diesel and Rs 10-15 per liter on petrol.
Explaining the taxes, Union Finance Minister Nirmala Sitharaman said he was pleased that companies are making a profit by exporting fuel, but the tax measures were taken because these are “extraordinary times”.
“These are times when oil prices internationally are unbridled. They just go up and up. And for any country, like India for example, that is largely and very largely dependent on imports, we also need to pay that kind of money to get the imports. But then from India, the exports are done and at an abnormal price, (resulting in) extraordinary profits. We don’t blame the people who make profits. But to a time when we don’t have enough supplies in India, for exploration or for refining that happens in India,” she said.
Sitharaman said this decision was taken at a time when it is difficult even to get an affordable price for oil from abroad. “Wholesaler customers, who used to benefit from these (private sector) pumps, were now coming to the pumps of the public sector oil marketing companies and they are welcome to pick them up. But supplies will also need to be available,” she said.
The Ministry of Finance has not given a timetable for the continuation of the levy and will assess the situation every 15 days to examine the impact of these changes in rights.
Beginning in June, gas pumps across the country reported fuel shortages, causing them to close. The fuel shortage situation at the pumps peaked in mid-June, leading the government to issue a statement on the matter. The statement assured that there was enough fuel available in the country and asked oil marketing companies to ensure that their fuel pumps remain open.
Among other announcements, the government has also imposed a tax of Rs 23,250 per ton (through a special additional excise duty) or windfall tax on domestic crude sold to domestic refineries at international parity prices.
World crude prices have risen and domestic crude producers are making windfall gains. After the announcement, ONGC Ltd fell 13.40% on BSE. While Oil India fell more than 15%, Mangalore Refinery and Petrochemical fell 10%. Chennai Petroleum Corporation fell more than 5% and shares of Hindustan Oil Exploration Company fell more than 3%.
In addition, export policy conditions have been imposed by DGFT whereby exporters would be required to declare at the time of exports that 50% of the quantity mentioned in the shipping invoice has been/will be supplied domestically. during the current fiscal year.
A tax of Rs 6 per liter was also imposed on the export of aviation turbine fuel (ATF).
These measures, however, will not result in any increase in prices on the domestic market, the government said.
Meanwhile, the government has also raised import duties on gold from 10.75% to 15% to curb gold imports amid concerns over high gold imports which are putting pressure on the current account deficit.
“India doesn’t produce much gold at all. In fact, I can say zero. So you import, you pay foreign currency. You are importing a not-so-essential commodity but, of course, gold is inelastic in its demand. So you would like to see if you can at least try to discourage (gold imports),” Sitharaman said.