Tax cuts on petrol, diesel by Finance Ministry likely, say sources

New Delhi: Sources close to Finance Ministry said that the government is considering reducing excise duties on petrol and diesel to  bring down the prices.

Taxes and duties account for nearly 60 per cent of the retail price of petrol and diesel in the country.

The government twice raised taxes on petrol and diesel in the last 12 months to boost sagging tax revenues as the coronavirus pandemic hit economic activity. The consumers were deprived of low prices of fuel that was prevailing last year.

The sources said the Finance Ministry has already started consultations with some states, oil companies and the oil ministry to find the most effective way to reduce the prices of fuel.

It may be recalled that the Finance Minister Nirmala Sitharaman recently said that there is no time frame to reduce taxes on fuel, but  efforts are on to reduce fuel taxes.

India has called on OPEC to ease production cuts as higher crude prices are hitting fuel demand in Asia’s third largest economy. The fuel price rise also contribute to inflation.