KOCHI: The central government is planning to cut taxes on petrol and diesel to tackle the threat of inflation. According to reports, the price of petrol will drop by Rs 10 per litre and diesel by Rs 8 per litre. The Union Finance Ministry has handed over the proposal to the oil companies to reduce fuel prices.

The new proposal was rolled out by the BJP promptly to subdue the disgruntlement of people who suffered from the rising price of domestic goods and food products. The plan is made in such a way as to help the BJP garner more votes in the upcoming general elections. Currently, oil companies are making huge profits from the sale of petrol and diesel as the price of crude oil has fallen significantly in the international market.

Excise duty concession along with refinery gate price will be considered to provide relief to consumers. With crude oil prices falling to $78 per barrel in the international market, companies are making a profit of eight rupees per litre on petrol and seven rupees on diesel. Therefore, the central government's position is that the companies should also bear a part of the loss due to the price concession.

Two years ago, the central government reduced the tax on petrol by Rs 8 and diesel by Rs 6 after crude oil prices hit a record high in the international market. Now, the central government has decided to increase the windfall tax on petroleum crude oil from Rs 1,300 to Rs 2,300 per tonne.