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Finance ministry re-examining additional tax proposal on diesel cars

January 11, 2013, 04:57 PM IST by Ninad Mirajgaonkar
Finance ministry re-examining additional tax proposal on diesel cars

The latest in the many back-and-forth moves by the finance ministry is that it is re-examining the proposal to add excise duty on diesel cars irrespective of their category. If implemented, diesel cars will cost Rs 50,000-1,25,000 more. 

This measure is to discourage diesel fuel consumption by passenger cars - essentially, the diesel subsidies are going to those who don't deserve them. The domestic auto industry does not support this proposal, instead reiterating what they have said before, that the price of diesel should be deregulated, or at the very least, the difference in fuel prices should reduce to about 20 per cent.

Taxing diesel cars makes very little sense, since they don't form a large part of the diesel consumption of the country. The only rational way out is to reduce the subsidy on diesel, but that - unfortunately - isn't favourable to vote banks. 

 

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