Ministries in tussle over oil duty cuts

The finance ministry has opposed the petroleum ministry's proposal to cut duties on crude oil, cooking gas and kerosene as it is expected to cause a loss of around Rs 8,500 crore to the exchequer.

According to the revenue department's estimates, the government stands to lose around Rs 6,000 crore annually if the Customs duty on crude oil is halved to 5 per cent.

Similarly, the petroleum ministry's proposal to do away with the Customs duty on cooking gas (from 5 per cent at present) is estimated to cause a Rs 225 crore loss to the exchequer. Customs duty removal, however, was expected to be loss-neutral, officials said.

In addition, the excise duty cuts would result in a Rs 2,200 crore loss annually. While the abolishing the duty on LPG will cause a Rs 1,200 crore loss, doing away with excise on kerosene will result in a Rs 1,000 crore loss.