Govt looks to reduce tax on marine diesel oil to boost coastal, inland shipping
New Delhi: The union government is looking to reduce the tax on marine diesel oil (MDO) by building consensus to bring it under the Goods and Services Tax (GST), among other options. The goal is to reduce costs for coastal and inland shipping to help companies become more competitive and attract more cargo for this relatively less-polluting mode of transport.
The ministry of ports, shipping and waterways (MOPSW) will ask the ministry of finance and states to consider reducing taxes and bringing MDO under GST while considering additional incentives for the nascent sector, according to three people aware of the developments.
Revenue loss from the exercise will be minimal as marine fuel consumption accounts for about 1% of India’s fuel consumption. Even if states lose some revenue, they could be compensated for this under GST, one of the people cited above said.
India's demand for petroleum products including petrol, diesel, liquefied petroleum gas (LPG), aviation turbine fuel (ATF) and naptha is expected to touch a new high of 238.95 million tonnes this fiscal year. At this level, consumption of marine oil would be around 2.4 million tonnes.
