New Delhi, May 27: A cess or surcharge on income tax and corporate tax may be the next option with the Central Government to bail out oil firms reeling under high global oil prices.
Earlier, a proposal by the Petroleum Ministry to raise petrol price by Rs 10 a litre, diesel by Rs 5 per litre and that of LPG by Rs 50 per had not gone down well with the UPA Government. The new proposal comes after Finance Minister P Chidambaram's reluctance to slash duties on crude oil and petroleum products unless alternate source of revenues were identified. Petroleum Minister Murli Deora met Chidambaram today but could not convince him of the urgency to cut import and excise duties to avoid the Rs 2,00,000 crore revenue loss expected on petrol, diesel, domestic LPG and kerosene this fiscal.
BPCL and HPCL can buy crude oil only till July while Indian Oil can afford imports till September. The three firms face huge liquidity crisis as they fail to recover full value of the products sold. "We don't want to see scarcity of petroleum products particularly kerosene and LPG," Deora said. "Oil companies are in a precarious state and we need urgently find solutions." He informed that some proposals were discussed but "nothing has been agreed."
Sources said a cess or surcharge on income and corporate tax similar to one levied after the Kargil war, may be on the cards to balance the cut in customs duty on crude oil to zero from 5 per cent and an excise duty cut on petrol and diesel.