In the wake of a marked preference of personal vehicle owners, more so after the hike in petrol prices, the Finance Ministry is having a re-look at the Petroleum Ministry's proposal to hike the excise levy duty on diesel cars so as to disincentivise consumption of the subsidised transportation fuel.
Indicating to the media that the proposal is still under the government's scanner, CBEC (Central Board of Excise and Customs) Chairman S. K. Goel said: “The proposal is there and that is being examined by Finance Minister. Consultations are being held and appropriate decision will be taken by the government in due course.”
At present, despite the wide gap in the prices of petrol and diesel, the excise duty on petrol cars (with engine capacity below 1,200 cc) and diesel cars (with engine capacity under 1,500 cc) is the same at 12 per cent and exactly double at 24 per cent if the length of the vehicle exceeds four metres.
On the other hand, for petrol and diesel vehicles exceeding four metres in length and engine capacities of more than 1,200 cc and 1,500 cc, respectively, attract a fixed duty of Rs.15,000 along with an ad valorem levy of 27 per cent.
Owing to the heavy subsidy on diesel, an unintended anomaly in consumption of the fuel has been creeping in, leading to increased use of the fuel for private transportation. Luxury cars and SUVs have a diesel powertrain and owing to the pricing difference, the rich have been enjoying the benefits of the subsidised fuel. According to Petroleum Ministry estimates, 15 per cent of the diesel consumed in the country is accounted for by personal diesel vehicles and SUVs and, going by the trend, is set to increase further.
To tackle the problem, the Petroleum Ministry has suggested in its Budget proposal to the Finance Ministry that an additional excise duty should be levied on diesel cars to discourage consumption of the subsidised diesel.
Keywords: diesel cars, excise duty
This is the most unlikely way to discourage diesel usage by rich people! They will simply get another 15,000 written off for tax benefits! Adding to the cost of the vehicle will not significantly alter a purchase decision of a diesel vehicle which can run happily on subsidies paid for by other much poorer road users. Remove the subsidy on diesel and get real, please. It even costs more to produce diesel, so just stop torturing petrol users.
what about existing diesel vehicle?. they are enjoying the subsidy! do you want to push back diesel engine related manufacturing industries?. you want to continue the subsidy somehow, right? do some thing for the future of the country & its generation. even it benefit the entire world by reducing the over all fuel consumption & carbon emission. make price parity for all fuel with international price once for all. By simply declaring the international price parity, world fuel price will fall 1-1.5% immediately. let your vote bank politics set aside for once at least.
The government can introduce a COMPONENT in the annual INSURANCE PREMIUM of private diesel vehicles, which should be significant enough to make it less attractive when compared to the running cost of a petrol vehicle. Increasing the excise duty on selling price of diesel vehicles will not deter the rich from buying diesel cars.
Government can not do away with the subsidies on diesel and the only way to bring down the consumption of this subsidised fuel is to discourage the purchase of diesel cars. Government should go for a fixed duty of Rs.15,000 along with an ad valorem levy of 27 per cent on all diesel cars. The Common Man and the Political Parties who are concerned about his welfare will not object to this proposal.
Finally some thought..well one will mostly bribe to make any law useless. India, in the cities there is no place to drive and park If they want to get it right..they must cancel giving car licenses first. Like singapore very few can own cars like doctors and only one car must be allowed per family. They can tax heavily whether it uses gas or diesel..This is absolute ridiculous to drive in the city. This is the only way to make people commute shorter distances, avoid traffic jams and curb pollution and Encourage alternate ways.
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