The finance ministry is unlikely to cut the Customs duty on crude oil in the forthcoming Budget. At present, the government levies a 10 per cent duty on crude oil imports and a 20 per cent duty on import of petroleum products.
According to senior finance ministry sources, a cut in the Customs duty on crude oil will severely dent collections.
Last fiscal, of the Rs 10,670 crore (Rs 106.70 billion) Customs revenue from the petroleum sector, the lion's share of Rs 7,619 crore (Rs 76.19 billion) came from the Customs duty on crude oil. Reducing the duty on crude oil to 8 per cent alone will cost the exchequer over Rs 1,500 crore (Rs 15 billion).
The sources said in recent meetings between Petroleum and Natural Gas Minister Mani Shankar Aiyar and Finance Minister P Chidambaram, several alternatives, including rationalisation of the Customs duty on crude oil and a further cut in the excise duties on petrol and diesel, were discussed. "The revenue impact weighs against a cut in the Customs duty on crude oil," a source told Business Standard.
The sources also said the government would not contribute to the price stabilisation fund, being