Petrol and diesel prices may fall soon as the government is mulling a 'windfall tax' on oil and gas companies for any revenue that they earn from prices crossing $70 a barrel. Subsequently, this tax revenue will be used to pay fuel retailers like Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) to absorb the hike in fuel prices.
Meanwhile, oil prices continued to rally upwards for the 12th day straight on Friday with petrol and diesel being hiked by 32 and 18 paise, respectively.
According to the Indian Oil Corporation (IOCL), revised petrol prices in metropolitan cities are: Delhi (Rs 77.83 per litre), Mumbai (Rs 85.65 per litre), Kolkata (Rs 80.47 per litre), and Chennai (Rs 80.80 per litre). The revised diesel prices are: Delhi (Rs 68.75 per litre), Mumbai (Rs 73.2 per litre), Chennai (Rs 72.58 per litre), Kolkata (Rs 71.30 per litre).
Fuel prices have been increasing after the 19-day hiatus during the Karnataka polls.
Here are the top 10 points on rising petrol and diesel prices:
1) Govt may levy 'windfall tax' on ONGC, OIL to bring down rising fuel prices: The government is likely to levy a 'windfall tax', in the form of cess, on companies like Oil and Natural Gas Corporation (ONGC) and Oil India (OIL) for any revenue that they earn from prices crossing $70 a barrel.
The move may add additional pressure to oil producers that were already paying a higher cess after the switchover of fixed amount to 20 per cent ad valorem rates in 2016.
This tax revenue will be used to pay retail majors like IOC, BPCL, and HPCL to absorb the fuel price hike.
2) Centre working on long-term Union Petroleum Minister Dharmendra Pradhan has said that the government is working on a long-term solution to curb rising oil prices in the country.
"Goods and Service Tax (GST) is one way being looked into to ease the situation. Besides, many other options are being explored for both short- and long-term solutions," Pradhan told reporters on Thursday.
He also argued that several reasons were responsible for the hike in prices of petrol and diesel, including the political conditions in oil producing countries and the international market.
"Some of them include fluctuations in international market and depreciation of Indian rupees against the US dollars. The Centre is working out a plan to control the increase in fuel prices," he added.
He also said that the weakening of the Indian rupee against the US dollar is causing the fuel price hike.
The Opposition Congress and Nationalist Congress Party (NCP) on Thursday took out a protest march in Mumbai and other places in Maharashtra against the rising fuel prices.
In Mumbai, Mumbai Regional Congress Committee president Sanjay Nirupam led a march of party workers and citizens from Santa Cruz East on the Western Express Highway to the Mumbai Suburban District Collectorate in Bandra East.
Protests were also held in Pune, Dhule, and other cities.
4) Resolve people's problems due to fuel price hike, Mamata tells Centre: West Bengal chief minister Mamata Banerjee on Thursday asked the Centre not to see the issue of fuel hike as a matter of politics and demanded that the Centre should address the problems faced by the common man due to rising oil prices.
Trinamool Congress (TMC) leaders are also scheduled to hold protests rallies in Kolkata on Friday. Similar protests will be held in the state's districts on Saturday and Sunday.
According to a Reuters reports, oil prices fell marginally on Friday as Russia hinted that it may increase its output after withholding the supplies since 2017.
Brent crude closed at $78.78 per barrel at 00:24 am on Friday after it crossed the $80 earlier in May.
6) HPCL chief says review taxes on petrol, diesel: HPCL CMD Mukesh Surana on Wednesday said that there is a need to review taxation on petrol and diesel to provide relief to consumers. According to Surana, the solution has to be found while balancing the budgets of oil companies, the consumer, and the government.
7) 'Petrol, diesel prices might stay high in immediate future': In the immediate future, fuel prices might stay high, Surana told news agency ANI. He said that there is an Organization of the Petroleum Exporting Countries (OPEC) meeting scheduled to take place soon from where some triggers might come. "If OPEC countries increase production of oil, that could help fix the perception of high demand and less supply," he said.
8) GST on fuel not possible until all state FMs agree, says MoS Finance: Minister of State (MoS) for Finance Shiv Pratap Shukla on Wednesday said that imposing GST on fuel would not be possible until and unless all state finance ministers agreed. "Crude is imported. Foreign companies are raising price. Petroleum minister has said petrol and diesel should be brought under GST. Point is, it can't be brought before the Council until and unless all state finance ministers agree," Shukla said.
9) Govt to lose Rs 130 billion over every rupee cut in excise duty: The Centre levies Rs 19.48 excise duty on a litre of petrol and Rs 15.33 on diesel. State sales tax or VAT varies from state to state. Unlike excise duty, VAT is ad valorem and results in higher revenues for the state when rates move up. In Delhi, VAT on petrol was Rs 15.84 a litre, and Rs 9.68 on diesel in April. Today, it is Rs 16.41 on petrol and Rs 10.05 a litre on diesel.
Every rupee cut in excise duty on petrol and diesel will result in a revenue loss of Rs 130 billion (Rs 13,000 crore).
10) Excise on fuel raised 9 times between Nov 2014 and Jan 2016: To shore up finances as global oil prices fell, the government had raised excise duty nine times between November 2014 and January 2016. Subsequently, the government had cut the tax just once in October last year by Rs 2 a litre. Subsequent to that excise duty reduction, the Centre had asked states to also lower VAT. Just four of them -- Maharashtra, Gujarat, Madhya Pradesh, and Himachal Pradesh -- reduced rates, while others, including BJP-ruled ones, ignored the call.
In all, duty on petrol rate was hiked by Rs 11.77 and that on diesel by Rs 13.47 a litre in those 15 months. This helped government's excise mop up more than double to Rs 2.42 trillion (Rs 2,42,000 crore) in 2016-17 from Rs 990 billion (Rs 99,000 crore) in 2014-15.
With agency inputs