Southern States - Tamil Nadu   

Marginal rise in petrol, diesel prices

By N. Ravi Kumar

CHENNAI MARCH 21. Petrol and diesel prices in the State will go up marginally from tomorrow morning, while the use of white kerosene as a substitute for diesel is expected to come down following today's budget announcement revising upwards sales tax on the fuels.

While the hike in diesel price would to be around 37 paise per litre, it is expected to be about 17 paise for petrol, oil industry sources said.

The oil industry is expected to make a formal announcement.

Stating that petrol and diesel, classified under the special rate slab (of over 20 per cent), "will be outside the value-added tax", the Finance Minister, C. Ponnaiyan, in his speech said, the additional sales tax and surcharge on products were being merged with their basic tax rate.

Seeking to "correct" the tax rates on the two ahead of the VAT regime, Mr. Ponnaiyan said the existing tax rate of 29.4 per cent (including additional sales tax and surcharge) would be rounded off at 30 per cent.

A common combined rate of 25 per cent would be levied on diesel and light diesel oil, which now attract a tax of 23.1 and 21.9 per cent respectively.

But, it was the announcement hiking the tax on white (parallel market) kerosene from four to 25 per cent, which is bound to cheer up the oil industry, as the fuel was being increasingly used as an alternative to diesel in automobiles and generator sets.

Describing it as a menace, in over ten districts, including the transport belt of Namakkal, a senior official of a national oil company estimated white kerosene to have accounted for at least eight per cent of the 10-12 per cent negative growth in the Statewide diesel sales last year.

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