Petrol, Diesel prices to decline as crude oil prices drop internationally

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But today the NDA government is putting the blame exclusively on the rise of crude oil prices by the oil producing countries.

The revenues so raised would be paid to fuel retailers, allowing them to absorb spikes beyond the threshold levels, they said. For relief to consumers, states will also have to cut Value-Added Tax. States too would be asked to cut sales tax or VAT to show a visible impact on retail prices. Petroleum minister will have a meeting with the officials of the oil companies.

A similar cess, like the windfall tax, was considered in 2008 when prices were on the rise.

The oil prices prevailing now in and around India's neighbouring countries are much lower than in India because, the incidences of tax levied there are much lighter than in our country. Brent crude is now priced around $76 per barrel. Upstream oil companies can not bear more given the burden of a 20% cess on crude, while reduction in duty will hit the exchequer. In 2011, the United Kingdom raised the tax rate on North Sea oil and gas profits when the price rose above $75 a barrel. "The Union Minister is making such statements only to shrug off his responsibility", said Behera.

Petrol and diesel prices were raised for the 11th day in succession on Thursday as the state-owned oil firms gradually passed on to the consumer the increased cost of worldwide oil that had accumulated since a 19-day freeze was imposed just before Karnataka elections.

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In the last few days, fuel prices have touched record highs, with petrol costing Rs 76.87 per litre in Delhi and diesel Rs 68.08 a litre.

Similarly, it is high time both the Government and common public cut their consumption of fuel, which will reduce out import burden of petrol and diesel.

The Union Minister said the Centre had cut excise duty on fuel by Rs 2 in October previous year.

It has also worked out the math of the amount of taxes that are shared with states as part of the devolution formula and what goes to the exchequer. The Centre gets huge revenue by way of excise duties on fuel prices, while VATs of different rates are charged by the States.

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