Carbon surcharge on JP-4, JP-8: MoF clarification sought

The Petroleum Ministry has sought an explanation from Finance Ministry regarding replacement of petroleum development levy (PDL) with carbon surcharge on two petroleum products-JP-4 and JP-8. The Petroleum Ministry in its letter to Finance Ministry has asked as to who would be responsible for notifying the levy of carbon surcharge on petroleum products. According to Finance Bill 2009-10, the government will charge Rs 8 per litre carbon surcharge on high speed diesel oil (HSDO), Rs 10 per litre on motor spirit (MS), Rs 6 per litre on kerosene oil, Rs 3 per litre on light diesel oil (LDO), Rs 14 per litre on HOBC and Rs 6 per kg on CNG. According to sources, the government charges general sales tax on PDL as GST is calculated on accumulated price of petroleum products that include PDL, IFEM, dealers and oil marketing companies” margins. The government has targeted collection of carbon surcharge on petroleum products at Rs 122 billion in budget for 2009-10 and Rs 12 billion collection through carbon surcharge on compressed natural gas (CNG). Analysts are of the view that carbon tax is undoubtedly a potential pot of money for the state, but the revenue stream has its drawbacks. (June 16, 2009)