Click to play videoNew Delhi: The Government is considering the option of imposing a cess on income tax to bail out state oil companies which are suffering huge losses because of global fuel prices.
"We don't want to see scarcity of petroleum products, particularly kerosene and LPG," said Petroleum Minister Murli Deora on Tuesday.
"Oil companies are in a precarious state and we need urgently find solutions," he said after meeting Finance Minister P Chidambaram.
Asked if the Government is considering a cess on taxes, Deora said he had discussed that option with Chidambaram but "nothing has been agreed upon."
Sources said a cess or surcharge, like the one levied after the Kargil war, maybe imposed on income and corporate tax to make up for the cut in customs duty on crude oil and the cut in excise duty on petrol and diesel.
The Petroleum Ministry has proposed to raise petrol price by Rs 10 per litre, diesel by Rs 5 per litre and that of LPG by Rs 50 per cylinder but the Government’s Left Front partners have refused to back any such move.
Deora on Tuesday failed to convince Chidambaram that the Government must cut import and excise duties to avoid the Rs 2,00,000-crore revenue loss expected on petrol, diesel, domestic LPG and kerosene this fiscal.
Oil firms BPCL, HPCL and Indian Oil are suffering losses amounting to Rs 580 crore daily. BPCL and HPCL have cash to buy crude oil only till July and Indian Oil can finance imports till September.
A surcharge on Income Tax to compensate oil firms has drawn a sharp reaction from the Left Front.
Revolutionary Socialist Party General Secretary and Rajya Sabha Member of Parliament Abani Roy said that additional taxes would only add to the problems of the common man.
"Finance Minister is putting the burden on common people, particularly the tax payers. They are paying taxes and overall they have to pay extra taxes only to balance the financial sector in the question of petroleum products," Roy said.
The Government was also considering changes in duties, and whether to issue more oil bonds to compensate state firms that are forced to sell petrol and diesel below cost.
S. Sundareshan, additional secretary in the oil ministry, said the Government was also considering changes in duties, and whether to issue more oil bonds to compensate state firms that are forced to sell petrol and diesel below cost.
The Government will soon take a decision on the Petroleum Ministry’s proposal to raise petrol and fuel prices. "Various measures to be taken were discussed and hopefully a decision will be taken soon," said Sundareshan.
(With PTI and Reuters)
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