ASSOCHAM calls for hike in petrol prices; MAT abolishment

New Delhi, May 22 (UNI) Besides urging the government to abolish Minimum Alternate Tax (MAT) on oil companies, ASSOCHAM today suggested an immediate upwardly revision in prices of petrol, diesel, LPG and kerosene to mitigate the impact of spiralling international crude prices on the oil marketing firms.

In a note submitted to the government, the Associated Chambers of Commerce and Industry (ASSOCHAM) demanded that abolition of MAT is immediately required as oil exploring and producing companies pay huge amount of revenues by way of indirect taxes on their productivity.

Such companies also pay hefty amount of custom duty on the imported equipment as well as excise duties and sales tax/VAT on indigenous purchases and turnover. Imposition of MAT on such entities cut their margins and render them non-competitive and therefore there is no justification of MAT on them, the Chamber said.

Rationalisation on the taxation structure of petroleum products to offset huge losses of oil marketing companies, whose margins have been very badly eroded on account of high crude oil prices globally, is another requirement, it said.

Therefore, the government should immediately revise the prices of petroleum products particularly diesel, kerosene, LPG and even petrol, it added.

''If subsidies on petroleum products is not wiped out through their price hike, oil companies in the downstream sectors like IOC, HPCL, BPCL and others would suffer under recoveries,'' ASSOCHAM President Anil K Agarwal said.

In the previous year, their losses were estimated at Rs 45,000 crore, he said.

In order to mitigate the impact of rising international crude prices, the Left leaders have also wanted customs duties to be halved and a specific excise duty levied on products, Mr Agarwal said.

For the current fiscal, the estimated under recoveries will be over Rs 70,000 crore, of which upstream sector is expected to be Rs 24,000 crore, while the amount of refineries and oil marketing companies has yet to be worked out.

The Chamber added that the hydrocarbon sector is the backbone of the Indian economy. The growth of the industry as a whole largely depends on the easy availability of the petroleum products at reasonable prices.

However, considering the substantial and sustained increase in international prices of crude oil and petroleum products, it is imperative that domestic production of petroleum products as well as exploration of new fields are given the highest priority.

UNI PV CS RS1710