In a series of measures to regulate imports and exports of items such as crude oil and gold, the government has imposed special additional excise duty/cesses on exports of petrol and diesel of Rs 6 per litre and Rs 13 per litre on diesel, respectively. Import duty on gold has been hiked to 15 per cent from 10.75 per cent to curb imports of gold amid concerns over high gold imports putting pressure on current account deficit.
A cess of Rs 23,250 per tonne (by way of special additional excise duty) or windfall tax has been imposed on crude. A special additional excise duty (SAED) of Rs 6 per litre has also been imposed on exports of Aviation Turbine Fuel.
Petroleum duty changes
In a bid to regulate domestic crude oil producers from importing crude oil and then selling it at international parity prices, a windfall tax has been imposed. “The domestic crude producers sell crude to domestic refineries at international parity prices. As a result, the domestic crude producers are making windfall gains. Taking this into account, a cess of Rs 23,250 per tonne has been imposed on crude. Import of crude would not be subject to this cess,” the release said.
“The refiners export these products at globally prevailing prices, which are very high. As exports are becoming highly remunerative, it has been seen that certain refiners are drying out their pumps in the domestic market,” it said.
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So, cesses of Rs 6 per litre on petrol and Rs 13 per litre on diesel have been imposed on their exports.
Also, export policy condition has been imposed by the DGFT that the exporters would be required to declare at the time of exports that 50% of the quantity mentioned in the shipping bill has been/will be supplied in the domestic market during the current fiscal. “These measures would not have any adverse impact on domestic retail prices of diesel and petrol. Thus, domestic retail prices would remain unchanged. At the same time these measures will ensure domestic availability of the petroleum products,” it said.
Why the duty changes on petroleum?
For much of June, several cities across the country witnessed petrol pumps rationing supplies or shutting due to non-availability of fuel, leading to concerns about shortages and triggering panic buying among some consumers.
The situation peaked around the middle of the month, and the government intervened by asking pumps to stay open and directing oil marketing companies (OMCs) to ensure the availability of fuel. The Ministry of Petroleum and Natural Gas also assured there was enough fuel in the country.
As global crude prices increased and the value of the rupee fell simultaneously, OMCs such as state-owned IOCL, HPCL, and BPCL, and private companies Rosneft-backed Nayara Energy and Reliance Industries, started to report losses on retail sales.
As the losses mounted, downstream oil companies tried to reduce supply to petrol pump vendors, which resulted in fuel shortage at pumps in multiple states. In a statement issued on June 15, the government acknowledged the problem — and said that shortages had been noticed in Rajasthan, Madhya Pradesh, and Karnataka.
Gold import duty changes
There has been a sudden surge in imports of gold. In May, a total of 107 tonnes of gold was imported and in June also the imports were significant, a finance ministry release said. The surge in gold imports is putting pressure on the current account deficit. To curb import of gold, customs duty has been increased from present 10.75% to 15%.
Earlier, the basic customs duty on gold was 7.5 per cent, now it will be 12.5 per cent. Along with agriculture infrastructure development cess (AIDC) of 2.5 per cent will take effective gold customs duty to 15 per cent.