Diesel cars will most likely be exposed to high taxes if the government pays much heed to the proposals made by the Parliamentary panel on petroleum and natural gas. The report, Challenges of Under-Recoveries of Petroleum Products, drafted by the Standing Committee on petroleum and natural gas has advised the government to impose excise duty on private diesel cars at the time of its purchase. It has also suggested that the amount accumulated from these taxes will be used for “compensating the under recoveries of oil marketing companies.”
However, Praful Patel, the Heavy Industries Minister, does not agree with this move. He, in a letter to Pranab Mukherjee, the Finance Minister, asked not to increase taxes on diesel cars. At the moment, about 22 per cent of excise duty is levied on large petrol and diesel cars and 10 per cent on the ones lesser than 4 metres.
There is a huge difference between the retail price of petrol and diesel as the latter has lesser taxes and an assistance of Rs. 10.83 as on 23rd December 2011 on every litre being sold. However, according to the panel there is an advantage in lowering prices as petrol is used by private car owners whereas public transport and agriculture system use diesel.
The Petroleum Ministry data states that the usage of diesel increased by 8 per cent to 42.04 million tonnes in the April and November period this year. According to the panel, the diesel consumption by the private car owners is about 15 per cent. However, most agencies and the Heavy Industries Ministry are arguing against this figure.
The panel said, “33 per cent of diesel is being used by those sections which are taking unfair advantage of low taxation and subsidy on the fuel.” The government has been advised to curtail the benefits offered to such sectors which bear the fruit of subsidised fuel. Praful Patel acknowledged this fact, but said that it should happen over a period of time like petrol. He also added that the diesel technology has enhanced because of which its usage has reduced carbon emissions leading to lesser pollution.
