The prices of Superior Kerosene Oil and Light Diesel Oil are expected to increase . The Petroleum Division has proposed to uplift the Petroleum Levy (PL) and General Sales Tax (GST) on both the products.
The Petroleum Division has suggested that the GST and Petroleum Levy equivalent to High-Speed Diesel (HSD) will be applicable, as per the rates notified by the government from time to time.
According to the summary of the Petroleum Division, the combined demand for Superior Kerosene Oil and Light Diesel Oil (SKO/LDO) was just around 0.4 percent (85,000 MT) of the total demand for petroleum products in the country during the fiscal year (FY) of 2021.
The entire demand for these products is met through local refinery supplies, and no imports are required. But the pricing of SKO/LDO in the country has always been highly subsidized with the lowest levels of taxation
There is a significant price differential between HSD and SKO/LDO, which leads to adulteration by mixing these two products in HSD, thereby opening avenues for undue profiteering by unscrupulous elements and consequent loss of revenue on HSD supplies.
Since the price differential vis-a-vis HSD is on the higher side, it will lead to more motivation for adulteration as well as space for oil marketing companies (OMCs) to swallow this gap.
In response to the situation, it would be appropriate if GST and PL equivalent to HSD were applied to generate some tax revenues for the government as well, rather than allowing an open field for OMCs to play.