Electronic tax

India cuts tax on fuel and basic necessities

Reuters

NEW DELHI – India on Saturday announced a series of changes to the tax structure levied on crucial commodities in a bid to protect consumers from rising prices amid high inflation.

Finance Minister Nirmala Sitharaman announced a cut in excise duty on petrol by Rs 8 ($0.1028) per liter and Rs 6 per liter on diesel.

The new petrol and diesel tax regime could result in the government losing around 1 trillion Indian rupees in annual revenue due to lower collection, she said in a series of tweets. .

The government has also removed import duties on anthracite, PCI coal and coking coal in an effort to reduce raw material costs for local market demand.

The latest measures will come into effect from May 22, the government said in a notification after Ms Sitharaman’s announcement, who also urged state governments to follow suit with similar reductions in fuel prices in line with the federal plans.

A liter of gasoline currently costs 105.41 rupees, while diesel is 96.67 rupees in New Delhi.

The government will also provide a new subsidy of Rs 200 per cylinder of cooking gas to over 90 million beneficiaries under a social welfare scheme set up for women living below the poverty line.

The grant will affect the annual revenue of nearly 61 billion Indian rupees, Ms Sitharaman said.

“Prime Minister Narendra Modi specifically asked all branches of government to work sensitively and provide relief to the common man,” she said.

The government was also working to reduce raw material taxes for plastic products to reduce the cost of finished products.

Experts said the latest measures would likely increase fiscal worries and raise doubts about the government’s ability to meet its deficit target of 6.4% of gross domestic product (GDP) for 2022-23.

But inflation has become a major headache for Mr Modi’s government ahead of elections for several Indian state assemblies this year.

A sharp rise in inflation has led to higher input costs for businesses. The rise prompted the central bank to raise interest rates at an unscheduled policy meeting this month.

“Today’s decisions, especially the one relating to a significant drop in petrol and diesel prices, will have a positive impact on various sectors, bring relief to our people,” Mr Modi wrote on Twitter. . “It’s always people first for us!” — Reuters