Crude Effect: You may be taxed to keep Oil price

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	2008-05-27 16:25:00
	Crude Effect: You may be taxed to keep Oil price Commodity Online NEW DELHI: The skyrocketing crude oil price may take away a small part of your monthly salary, soon. The Indian government is planning to introduce a surcharge on income tax and corporate tax to help oil firms gap their mounting losses. In the past few months, India's state-owned oil companies have been reeling under the rising crude oil prices across the globe. Companies like Indian Oil, ONGC and Bharat Petroleum have been incurring losses of several hundreds of crores as they continue to dole out subsidsed petrol, diesel and cooking gas to the people. Prime Minister Manmohan Singh has convened several Cabinet meetings in the past few months in an attempt to hike the prices of petroleum products. But so far, the government has not yet mustered up the courage to increase the fuel prices thanks to political pressure from Left parties. The government fears that a steep hike in fuel prices will result in a political backlash, as the ruling Congress party is preparing for the general elections in the next one year. Already, Congress lost out to the opposition Bharatiya Janata Party (BJP) in the state elections in southern state of Karnataka last week. Faced with no alternative, the government is now considering levying a surcharge on income-tax and corporate tax to bailout oil firms that are reeling under high international oil prices. Officials said this was one of the proposals discussed when Petroleum Minister Murli Deora met Finance Minister P Chidambaram on Tuesday morning. Deora told reporters that they discussed various options but nothing has been decided. "We will take a decision on what to do with oil pricing very soon," he said. The government has also been considering to hike the prices of petroleum products. Officials in the Ministry of Petroleum had hinted on Monday that petrol prices will be hiked anything between Rs 10-Rs20 per litre soon. In India, petrol is currently being sold at a loss of Rs 16.34 a litre and diesel at Rs 23.49 per litre. Officials said deregulating petrol price would mean that its prices would move in tandem with global crude oil prices. The rise in global oil prices that last week touched an all time high of $135 a barrel has forced the government to consider options to save state-run firms that expect a revenue loss of Rs 200,000 crore (Rs 2000 billion) this fiscal on sale of petrol, diesel, domestic LPG and kerosene. Officials said deregulating petrol would lower the revenue losses by just Rs 20,000 crore (Rs 200 billion). Half of the current estimates are on account of diesel rates.