Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ARTICLES ON INPUT TAX CREDIT IN VAT :: cpt :: ACCOUNTING STANDARD :: empanelment :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: VAT Audit :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: list of goods taxed at 4% :: TDS :: Central Excise rule to resale the machines to a new company :: articles on VAT and GST in India :: ACCOUNTING STANDARDS
 
 
Direct Tax »
 Income tax return: TDS refund on capital gains invested needs to be instant
 CBDT holds circular on indirect tax provisions
 CBDT puts on hold circular on taxation of indirect transfer of shares
 CBDT prods officials to meet tax collection targets
 Budget 2017: Direct tax reforms to be gradual than radical, says KPMG
  FM Arun Jaitley may drop tough tax accounting rules
 FM Arun Jaitley may drop tough tax accounting rules
 How to view your TDS through form 26AS?
 Deduction of tax at source Income-tax deduction from salaries under section 192 of the Income-tax Act, 1961
 Banks must furnish information on accounts that have seen deposits over 2.5 lakh: CBDT
 Govt expects direct and indirect tax targets to exceed budget estimates this fiscal

Fuel hike: Too little too late
June, 05th 2008

 The fuel price hike announced by the government is a clear case of too little too late. It covers less than 10% of the losses of oil companies, still leaving the fisc and the oil companies to bear the bulk of the burden.

Worryingly, the government has almost ruled out more price hikes if crude remains stable and has not indicated the course of action should crude prices rise, which is likely. Clearly, the intent is to limp along for the next twelve months and leave it to the next government to grapple with the issue.

At current international crude prices, the total under-recovery of oil marketing companies is estimated at Rs 2,45,305 crore for 2008-09. The product price increases petrol Rs 5/litre, diesel Rs 3/litre and LPG Rs 50/cylinder would yield only about Rs 21,000 crore. That the price hike only covers a fraction of the under-recovery of oil companies underscores the extent of mismanagement of the oil economy.

Having failed to revise prices periodically, the government found itself unable to pass on to the consumer even a quarter of the global oil price spike. Things got worse with the issue of inflation getting deeply politicised. It is the country and not the government that will now bear the cost of this political expediency.

Over 55% of the under-recovery is to be met through oil bonds of Rs 135,000 crore, a liability on the future. Public sector oil companies, upstream and marketing, have to pitch in with Rs 65,000 crore, again a tax on the nation. The only direct cost to this government, to the extent it constrains expenditure, is the Rs 22,600 crore foregone in tax revenues due to the reduction in excise and customs duty.

The only silver lining is that the oil marketing companies would have some breathing space. They would get an additional about Rs 44,000 crore through product price hike and reduction in various duties and the oil bonds that they receive from the government would be more liquid. Clearly, some sort of institutional arrangement is required to depoliticise the oil economy.

The government could make price revision legally mandatory, should global crude prices move up by a certain percentage. It should also address the issue of off-budget funding of consumer subsidies that have made a mockery of fiscal responsibility legislation.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - We Bring IT. Offshore software outsourcing company. We use Global Delivery Model (GDM) and believe in Follow The Sun principle

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions