Oil marketing companies (OMCs) have reworked the surcharge paid towards various state levies. This has led to prices of petroleum products increasing in states such as Maharashtra, Assam and West Bengal and declining in others such as Gujarat and Karnataka.
Oil companies maintain this is a revenue-neutral exercise, aimed at adjusting the changes in state taxes.
Prices of kerosene sold under the Public Distribution System have been reduced in nine states, while those of domestic liquefied petroleum gas (LPG) have been cut in 12. However, kerosene prices have been increased in eight states, while domestic LPG prices have been raised in six.
There was a need to review the Irrecoverable Taxes Compensation Scheme of 2002 to rationalise the levy on a state-to-state basis and reflect the fall in prices in states where irrecoverable taxes had seen a decline.
This would also ensure an increase in prices in states where taxes were raised, as well as reduce the burden on OMCs on account of irrecoverable taxes.
Accordingly, it has been decided the revised structure of ‘state-specific cost’ would be implemented to cover the irrecoverable taxes, read an IndianOil statement.
The scheme would be reviewed on a quarterly basis by the oil companies and changes, if required, would be made in the state-specific costs.
The 2002 scheme provided for compensation to oil marketing and refining companies related to irrecoverable state taxes or those levied by local authorities such as entry tax on crude, surcharge on sales tax, central sales tax, purchase tax on inter-company sales of petroleum products, etc.
In 2002-03, this compensation was realised through the amount collected by OMCs via consumer selling prices under ‘state surcharge’.
This surcharge ensured any irrecoverable tax of a particular state was recovered from that state.
The rate of this surcharge has remained unchanged since then.
|FUEL CONTROL: SWINGING BOTH WAYS
The impact of the revision (excluding state levies) in some of the states
|*HSD: High-speed diesel; SKO: Subsidised kerosene oil; LPG: Liquified petroleum gas; MS: Motor spirit
Source: Oil marketing companies