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Total tax on petrol down to 50 per cent, diesel to 40 per cent after duty cuts

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NEW DELHI: The total incidence of taxes on petrol has come down to 50 per cent and that on diesel to 40 per cent following a reduction in excise duty by the central government, and by a slightly higher proportion in states that have also cut local sales tax or VAT on the fuel.
The retail price of petrol and diesel is decided after adding central excise, commission paid to dealers and value-added tax (VAT) to basic oil prices. The basic oil price is the prevailing international benchmark rate plus freight.
On November 1, prior to the duty cuts, central excise of Rs 32.90 a litre and VAT of 30 per cent in Delhi made up for 54 per cent of the retail selling price of diesel, according to price build-up of the fuel available from state-owned fuel retailers.
This, after the Rs 5 per litre reduction in excise duty, has come down to 50 per cent in Delhi.
Two dozen states and UTs have matched the central government’s excise cuts with a VAT reduction. And, in those states, the percentage of taxes in retail price will be marginally lower. Delhi has not yet lowered the VAT.
Similarly, on diesel, the central excise duty of Rs 31.80 per litre and 16.75 per cent of VAT plus air ambience charges of Rs 250 per kilolitre, brought the total incidence of taxation in Delhi to 48 per cent.
This, after the Rs 10 a litre cut in excise duty, has come down to 40 per cent in Delhi. In cases that have cut VAT, the incidence will be even lower.
Basic price, which includes the cost of oil plus freight, varies between Rs 52.01 a litre in Chennai to Rs 59.89 in Ladakh. On top of this, the central government charges an excise duty of Rs 27.90 which is paid at the factory gate (refinery in this case). Thereafter, the state governments levy different rates of local sales tax or VAT.
Rajasthan has the highest VAT on petrol of Rs 30.51 a litre, followed by Maharashtra with Rs 29.99, Andhra Pradesh (Rs 29.02) and Madhya Pradesh (Rs 26.87). The lowest VAT of Rs 4.93 a litre is levied in Andaman and Nicobar.
Similarly, the basic price of diesel varies from Rs 52.13 a litre in Chennai to 59.57 in Ladakh. On top of this, the central government charges an excise duty of Rs 21.80.
The highest VAT of Rs 21.19 a litre is levied in Andhra Pradesh, followed by Rs 21.14 in Rajasthan and Rs 20.21 in Maharashtra. Himachal Pradesh levies the lowest VAT of Rs 4.40 a litre, and Andaman and Nicobar charges Rs 4.58.
Petrol pump dealers are paid Rs 3.85 per litre commission on petrol and Rs 2.58 on diesel.
Petrol prices have been further reduced by as much as Rs 8.7 per litre and diesel Rs 9.52 in BJP-ruled states and Union territories – from Ladakh to Puducherry – after they matched the central government’s announcement of a cut in excise duty with slashing of VAT.
Buckling under pressure, the Union government had last week cut excise duty on petrol by Rs 5 per litre and that on diesel by Rs 10 a litre to give reprieve to consumers battered by record-high retail fuel prices.
This announcement was matched by 24 states and Union territories cutting VAT rates in different proportions.
This has led to BJP and its partner-ruled states witnessing steeper reductions in petrol and diesel prices in comparison to Maharashtra, Delhi, West Bengal and other states that are governed by other political parties, according to a price chart of different locations prepared by state-owned oil firms.
The additional reduction, on top of the excise duty cut, is the lowest in Uttarakhand because of lower duty cuts and the highest in Ladakh. On petrol, the price reduction over-and-above excise reduction ranges from Rs 1.97 per litre in the case of Uttarakhand to Rs 8.70 in the case of Ladakh.
For diesel, the additional reduction warranted by VAT cuts, ranging from Rs 17.5 a litre in Uttarakhand to Rs 9.52 in the case of Ladakh.
The states that extended additional VAT benefits include Karnataka, Puducherry, Mizoram, Arunachal Pradesh, Manipur, Nagaland, Tripura, Assam, Sikkim, Bihar and Madhya Pradesh.
They also include Goa, Gujarat, Dadra and Nagar Haveli, Daman and Diu, Chandigarh, Haryana, Himachal Pradesh, Jammu and Kashmir, Uttarakhand, Uttar Pradesh, Odisha, Meghalaya and Ladakh.
States that have so far not lowered VAT include the Congress and its allies-ruled Rajasthan, Punjab, Chhattisgarh, Maharashtra, Jharkhand and Tamil Nadu. They also include AAP-ruled Delhi, TMC-governed West Bengal, Left-ruled Kerala, TRS-led Telangana and YSR Congress-ruled Andhra Pradesh.
Wednesday’s excise duty cut had translated into a reduction in the price of petrol in the range of Rs 5.7 to Ras 6.35 per litre across the country and diesel rates by Rs 11.16 to Rs 12.88.
Since states charge VAT not just on the base price but also on the excise duty levied by the Centre, the total incidence of price reduction was higher than Rs 5 a litre cut in excise duty on petrol and Rs 10 per litre cut in diesel. The reduction was larger in states with higher VAT.
In Delhi, the reduction in petrol price was Rs 6.07 per litre, and that on diesel was Rs 11.75, according to the price chart.
After duty changes, the costliest petrol is sold in Rajasthan at Rs 111.10 per litre (Jaipur), followed by Mumbai (Rs 109.98) and Andhra Pradesh (Rs 109.05). The fuel is below Rs 100-a-litre-mark in most BJP-ruled states baring Karnataka (Rs 100.58), Bihar (Rs 105.90), Madhya Pradesh (Rs 107.23) and Ladakh (Rs 102.99).





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Services sector activity in November registers second-fastest pace of growth since July 2011: Survey

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NEW DELHI: Services sector activity expanded at the second-fastest pace in more than a decade during November, driven by sustained rise in new work and improvement in market conditions, a monthly survey said on Friday.
The seasonally adjusted India Services Business Activity Index was at 58.1 in November, fractionally down from 58.4 in October. The November figure points to the second-fastest rise in output since July 2011.
For the fourth straight month, the services sector witnessed an expansion in output. In Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion while a score below 50 denotes contraction.
“The recovery of the Indian service sector was extended to November, with a robust improvement in sales enabling the second-fastest rise in business activity in nearly ten-and-a-half years,” Pollyanna De Lima, economics associate director at IHS Markit, said.
Although companies forecast higher business activity volumes over the course of the coming year, the expansion is expected to be restricted by price pressures.
Amid reports of higher fuel, labour, material, retail and transportation costs, average input prices among Indian services companies rose further in November.
Meanwhile, the coronavirus pandemic and travel restrictions reportedly caused a further drop in international demand for Indian services. The latest fall in external sales was the twenty-first in successive months although among the slowest over this period, the survey said.
As per the survey, private sector activity in India continued to expand, taking the current sequence of growth to four months.
The composite PMI output index — which measures combined services and manufacturing output — rose from 58.7 in October to 59.2 in November, signalling the strongest upturn since January 2012.
“Looking at the manufacturing and service sectors combined, the results are even more encouraging and bode well for economic performance in the third quarter of fiscal year 2021-22 so far. With production growth quickening considerably in November, private sector output expanded at the fastest pace since January 2012,” Lima said.
India’s GDP growth stood at 8.4 per cent in the second quarter of 2021-22 and surpassed the pre-Covid level, official data showed on Tuesday.





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ramachandran: Sandeep Ghosh to head Visa India; Ramachandran relocates to Singapore

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MUMBAI: International digital payments major Visa has announced new leadership for India and South Asia, with the incumbent TR Ramachandran being relocated to Singapore from next year to lead its newly created new payment flows business.
Ramachandran will be succeeded by Sandeep Ghosh, most recently a partner and leader of the financial services consulting practice at EY India, said Chris Clark, Visa Inc regional president.
Ramachandran joined Visa in 2015 to lead its business across India and South Asia.
Deutsche Bank India expands wealth management team
Deutsche Bank India has announced expansion of its wealth management team with a team of new hires, taking the total strength to over 15 in the past one year alone.
The additional hires are being made across the areas of relationship management and investment advisory, Amrit Singh, head of wealth management for South Asia said.
Among the new hires include Rajasekar Ayyalu who has joined as a director in Chennai where he will be responsible for expanding and deepening the bank’s presence. He joins from Julius Baer where he was an executive director prior to which he worked at Merrill Lynch and the Royal Bank of Scotland.
In addition to Rajasekar, four vice-presidents — Jai Bhatia, Sanyam Sharma , Anjali Vashisth and Manish Lalwani–have joined the Delhi and Mumbai offices as relationship managers, Atinkumar Saha, head of wealth management at Deutsche Bank India said.





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Net direct tax revenue rises 68% to Rs 6.92 lakh crore till November 23

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NEW DELHI: The net direct tax collection grew nearly 68 per cent during April 1 to November 23 to more than Rs 6.92 lakh crore, Minister of State for Finance Pankaj Chaudhary said on Monday.
“The Net Direct Tax Collection figures for the FY- 2021-22 as on 23.11.2021 are at Rs 6,92,833.6 crores showing a growth of 67.93 per cent and 27.29 per cent over the net collection figures for the corresponding period FY2020-21 and FY 2019-20,” he said in a written reply in the Lok Sabha.
The net collection between April 1 – November 23 in 2020-21 and 2019-20 fiscals was over Rs 4.12 lakh crore and over Rs 5.44 lakh crore respectively.
The gross direct tax collection (before adjusting refunds) as of November 23 stood at over Rs 8.15 lakh crore, a 48.11 growth over the collections in the corresponding period in last fiscal.
Chaudhary further said that the gross GST collection in the current fiscal (April 2021-March’22) post Covid-19 outbreak is showing an increasing trend.
The gross GST collection for full 2020-21 ended March 2021 was over Rs 11.36 lakh crore, while the same in the current fiscal till October stood at Rs 8.10 lakh crore.
In reply to a separate question on whether incidents of tax evasion are increasing in Delhi and other parts of the country, Chaudhary said there is no evidence to suggest that incidents of income tax evasion are increasing in Delhi and other parts of the country.
“In terms of cases detected under Goods & Service Tax (GST) and Customs, there is no increasing trend in such evasion noticed in Delhi, although, there is overall increase in detection of GST and Customs evasion cases in the country,” he added.





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