Diesel cars could soon become costlier. The finance ministry is considering imposition of additional taxes of 10-15 per cent on diesel cars in the forthcoming Budget, official sources said. This extra tax could be imposed on diesel SUVs and MUVs.
Despite the overall slowdown, the demand for diesel cars is still strong, possibly due to the widening gap between petrol and diesel prices. After petrol prices were deregulated in June 2010, it has shot up by 30 per cent. Diesel, however, is still heavily subsidised by the government as farmers use it. Petrol is thus 55 per cent costlier than diesel.
A parliamentary standing committee had also suggested last month that additional duties should be imposed on diesel cars. The panel felt consumers were taking unfair advantage of the low tax and subsidy on diesel. It was, however, against deregulation of diesel at this point, fearing this could increase inflation.
