Government likely to ease taxes on oil sector

In a move aimed at lowering the prices of fuels, or at least preventing them from rising further, without hitting the health of oil marketing companies (OMCs), the Indian government is likely to tweak with the tax structure for the oil sector in the forthcoming Union Budget to be unveiled on February 28. OMCs are currently selling diesel fuel and cooking gas at a loss of more than Rs 7 (US$0.16) a liter and more than Rs 275 (US$6.07) a gas cylinder respectively. The finance ministry is planning to bring down the taxes on oil products, which will keep market prices down even if crude remains high. Another possibility is having a flexible taxing regime that would cut the tax on fuels when crude prices rise to cushion the increase in retail prices. (February 15, 2011)