The Revenue Department does not want to withdraw the Customs duty on crude oil; nor does it want a reduction in the excise duty on petroleum products. Any such move would reduce revenues in 2011-12.

This is significant because pressure is mounting on the Finance Ministry to cut Customs duty on crude oil and petroleum products to offset the impact of high international crude oil prices and the increase in diesel prices if they are de-regulated.

Currently, crude oil imports attract basic customs duty of 5 per cent. The customs duty on petrol and diesel is 7.5 per cent. For all other oil products, import duty is 10 per cent. The excise duty on petrol is Rs 14.35 per litre and on diesel it is Rs 4.60 per litre.

The Revenue Secretary, Mr Sunil Mitra, said here today at the 27th annual conference of chief commissioners and directors-general of income tax in the Capital on Tuesday that a reduction in indirect taxes cannot be an answer for either high international crude oil prices or diesel price deregulation.

This has raised doubts as to whether the Empowered Group of Ministers (EGoM) on petro-pricing will go in for diesel price de-regulation.

Mr Mitra also sounded a note of caution on achieving the direct tax mop-up target for 2011-12, given that the unrelenting inflation is expected to bring down domestic demand.

High inflation and escalating interest rates may impact corporate earnings in 2011-12 and thereby lower corporate tax payouts. The Centre is aiming at a 20 per cent increase in direct tax collections this fiscal at Rs 5.33 lakh crore.

I have serious apprehensions about our tax collections in current fiscal, Mr Mitra said. The Finance Minister, Mr Pranab Mukherjee, concurred with Mr Mitra's view, stating that situation was not all that conducive for strong growth in tax collections.