Bank deposit interest rate


Bank deposit interest rate


Reserve Bank of India (RBI) has informed that the Scheduled Commercial Banks are free to determine their savings bank deposit interest rate, with the approval of their respective Board of Directors, subject to the following two conditions:-


(i) Each bank will have to offer a uniform interest rate on savings banks deposits up to Rupees one lakh.

(ii) For any end-of-day savings bank balance exceeding Rupees one lakh, a bank may provide differential rates of interest, if it chooses, subject to the condition that banks will not discriminate in the matter of interest paid on such deposits, between one deposit and another of similar amount, accepted on the same date, at any of its offices.

RBI and Government has taken a number of steps for providing loans to the companies engaged in infrastructure development, which are as under:-

• Project Finance Guidelines of RBI.

• Long Term Structured Project Loans.

• Financing of Cost Overruns in Project Loans.

• Refinancing of Project Loans. • Extension of Date of Commencement of Commercial Operations – Change in Ownership.

RBI has informed that the Industry Outstanding Advances is Rs. 29,98,424 crore as on 31.03.2016 and Rs. 29,66,442 crore as on 31.12.2016.

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Rise in the per capita debt

There has been a rise in the per capita debt on March 31, 2016 as compared to March 31, 2015. There has been a rise of 9.2% in per capita total debt (internal and external) as on March 31, 2016 as compared to March 31, 2015. The per capita internal debt increased by 9.3% while per capita external debt increased by 5.1% during the given period. In absolute terms, the per capita total debt increased by Rs. 4,525/-, per capita internal debt by Rs.4,446/- and per capita external debt by Rs.80/- during this period.

The primary reason for the increase in debt has been increase in Government borrowings, majority of which has been due to increase in internal debt which contributes to 97% of total debt.

Payment of interest on the debt and repayment of principal amounts is an ongoing process and payments towards principal and interest are charged expenditures which are made as they fall due.

The reduction in per capita debt depends on the changes in the debt levels of the Government. The Government is adhering to a fiscal consolidation path in terms of the provisions of the FRBM Act with the objective to reduce fiscal deficit and Government debt. The Medium Term Debt Management Strategy (MTDS) also aims to reduce the cost of borrowing, mitigate risk to the Government and develop bond market in India. The Government is also pursuing an active debt management strategy under which short term bonds are switched with longer tenor securities through buy-backs to spread the redemption pressure on the Government evenly.

The process of demonetization is not related to reduction in per capita debt.

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Goods and Service Tax (GST) Bill

The 122nd Constitution Amendment Bill, 2014 has been passed by the Parliament and after ratification by fifty percent of the States, the same has been enacted as 101st Constitution Amendment, Act, 2016. No Goods and Service Tax (GST) Bill has so far been passed.

The Central Goods and Services Tax (CGST) Bill, Integrated Goods and Services Tax (IGST) Bill and Union Territory Goods and Services Tax (UTGST) Bill will be passed by Parliament. Each State, including Union territory with Legislature will pass its own State Goods and Services Tax (SGST) Bill.

It is the intended objective that the GST will simplify the trade and maintenance of accounts (income/ expenditure) and also check tax evasion in the country

GST is expected to have positive effect on trade and consumers in, interalia, the following manner:-

• Simpler tax regime;

• Reduction in multiplicity of taxes;

• Mitigation of cascading of taxes expected to result in reduction in final price of goods or services;

• Anticipated reduction in compliance costs ;

• Uniform Law, Rules, Tariff – between Centre and States and across States;

• Simplified and automated procedures.

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Direct Tax Collections up to February, 2017 show growth of 10.7%

Net growth in Corporate Income Tax at 2.6%

Net growth in Personal Income Tax at 19.5%

          The Direct Tax collections up to February, 2017 continue to show a steady growth trend. The collection net of refunds stands at Rs. 6.17 lakh crore, which is 10.7 % more than the net collections for the corresponding period last year. This collection is 72.9 % of the total Budget Estimates for Direct Taxes for Financial Year 2016-17.



As regards the growth rates for Corporate Income Tax (CIT) and Personal Income Tax (PIT), in terms of gross revenue collections, the growth rate under CIT is 11.9% while that under PIT (including STT) is 20.8 %. However, after adjusting for refunds, the net growth in CIT collections is 2.6 % while that in PIT collections is 19.5 %. Refunds amounting to Rs.1.48 lakh crore have been issued during April 2016- February 2017, which is 40.2% higher than the refunds issued during the corresponding period last year.

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Wholesale Price Index (WPI) based inflation

The Wholesale Price Index (WPI) based inflation increased to 5.2 per cent in January, 2017 from 3.4 per cent in the previous month mainly due to rise in ‘fuel & power’ inflation reflecting hike in global crude oil prices.

The Government has taken a number of measures to control inflation. The steps taken, inter alia, include, (i) increased allocation for Price Stabilization Fund in the budget 2017-18 to check volatility of prices of essential commodities, in particular of pulses; (ii) created buffer stock of pulses through domestic procurement and imports; (iii) announced higher Minimum Support Prices so as to incentivize production; (iv) issued advisory to States/UTs to take strict action against hoarding and black marketing under the Essential Commodities Act 1955 and the Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980; (v) imposed 20 per cent duty on export of sugar; and (vi) reduced import duty on potatoes, wheat and palm oil.

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Twin Balance Sheet problem relating to over leveraged companies and bad loans accumulation in banks.

Government and Reserve Bank of India have taken various measures to address the Twin Balance sheet problem relating to over leveraged companies and bad loans accumulation in banks. The Government has taken sector specific measures (Infrastructure, Power, Road, Textiles, Steel etc.) where incidence of NPA is high. The Insolvency and Bankruptcy Code (IBC) has been enacted and Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) and the Recovery of Debts due to Banks and Financial Institutions (RDDBFI) Act have been amended to improve resolution / recovery of bank loans. Six new Debt Recovery Tribunals (DRTs) have been established for improving recovery. RBI has provided a number of tools in this regard – Corporate Debt Restructuring (CDR), Formation of Joint Lenders’ Forum (JLF), Flexible Structuring for long term project loans to Infrastructure and Core Industries (5/25 Scheme), Strategic Debt Restructuring Scheme (SDR) and Sustainable Structuring of Stressed Assets (S4A).

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Insurance Literacy Programme in School Education

To implement National Strategy on Financial Education (NSFE) including knowledge on Money management, Budgeting, Saving and Investments, Banking, Credit, Insurance and protection related products and services, the financial regulators i.e. Insurance Regulatory and Development Authority of India (IRDAI), Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and Pension Fund Regulatory and Development Authority (PFRDA) have jointly set up National Centre for Financial Education (NCFE) under the guidance of the Technical Group of the Sub-Committee of the Financial Stability and Development Council (FSDC), Ministry of Finance.

Financial literacy in schools is one of the important objectives of NSFE. The NCFE has sensitized and communicated the need for including financial literacy as part of school curriculum to Central School Boards such as CBSE (Central Board of Secondary Education), CISCE (Council of Indian School Certificate Education), NCERT (National Council for Education Research and Training) as well as all the State Education Boards.

Further, the National Council for Education Research and Training (NCERT) has developed new syllabi and textbooks for all the stages of school education. These syllabi and textbooks in all the subject areas across the elementary stage incorporate components of life insurance literacy starting from the concepts of family, savings, money, etc. and further in class XI this has been introduced as a major theme ‘Life Insurance’ in Business Studies.

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Committee on Digital Payments

A committee was constituted by Department of Economic Affairs, under the Chairmanship of Shri Ratan P. Watal, Former Finance Secretary and Principal Adviser, Niti Aayog, in August 2016 to review medium term measures necessary to promote digital payment system in the country. This Committee on Digital Payments has recommended structural reforms in the payment eco system, including amendments to the Payment and Settlement Systems Act, 2007. The report of the Committee is available on the website of the Ministry of Finance at http://finmin.nic.in

Pursuant to the Government Initiative to promote digital payments, two committees were constituted in Niti Aayog; (i) Cabinet Secretariat constituted a Committee of Secretaries under the chairmanship of CEO, NITI Aayog on Friday, 25th November 2016 to identify and operationalize in the earliest possible time frame user friendly digital payment options in all sectors of the economy and (ii) NITI Aayog constituted a Committee of Chief Ministers with Shri Chandra Babu Naidu, Hon’ble Chief Minister of Andhra Pradesh as the Convener on 30th November 2016 for suggesting measures to seamlessly enable all sections of the population to migrate to the digital mode of payment as well as to recommend measures that would enable India to leapfrog into the advanced digital payment systems that compares with the best global standards.

The Committee of Chief Ministers submitted its interim report to Hon’ble Prime Minister on 24th January 2017. The interim report of the Committee of Chief Ministers on digital payments can be seen on http://niti.gov.in/writereaddata/files/new_initiatives/book.pdf.

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Gold Monetisation Scheme

Government launched Gold Monetisation Scheme in November, 2015. The Gold Monetization Scheme provides different options to the people to monetize the gold, by modifying the existing two schemes, namely, the Gold Deposit Scheme and the Gold Metal Loan Scheme. The details of the scheme are available on the website i.e. https://rbi.org.in



The scheme intends to mobilize the idle gold held by households and institutions in the country and to put this gold into productive use and in the long-run, to reduce the current account deficit by reducing the country’s reliance on the imports of gold to meet the domestic demand. Till 18/2/2017, 6410 kilograms of gold have been mobilized under this Scheme.



 Government launched Sovereign Gold Bond Scheme in November, 2015, as an alternative to purchasing metal gold. The scheme intends to reduce the demand for physical gold. The details of this scheme are available on the website i.e. http://finmin.nic.in/swarnabharat/sovereign-gold-bond.html



So far 7 Tranches of Sovereign Gold Bond have been issued.

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Linking of Bank Account with Aadhaar

Banks are committed to seed savings bank accounts with the accountholder’s Aadhaar number, based on the accountholder’s consent.

Aadhaar seeding will help accountholders to do fund transfer through the Aadhaar Enabled Payment System (AEPS) at Banking Correspondent points. Bharat Interface for Money (BHIM) app also supports pay to Aadhaar number mode. Further, Direct Benefit Transfer (DBT) can be made to eligible seeded accounts.

As per reports received from public sector banks, Regional Rural Banks and 13 private sector banks, there are 110.03 crore individual, operative savings bank accounts (including Pradhan Mantri Jan Dhan Yojana accounts) with Aadhaar number seeded in 52.95 crore accounts.

The overreaching aim and objective of seeding is enabling delivery of basic financial services.

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Lodging of complaints with CBI in cases of fraud /embezzlement by commercial banks and select Financial Institutions

Reserve Bank of India (RBI) Master Directions dated 01.07.2016 on Frauds-Classification and Reporting by commercial banks and select Financial Institutions, inter alia, provide as follows, in regard to lodging of complaints with CBI in cases of fraud /embezzlement:-



Category of bank Amount involved in the frauds

Public Sector Banks (PSBs)-Rs. 3 crore and above and uptoRs. 25 crore
CBI
To be lodged with Anti Corruption Branch of CBI where staff involvement is prima facie evident).

Economic Offences Wing of CBI (wherestaff involvement is prima facie not evident)
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PSBs -More than Rs. 25 crore and uptoRs. 50 crore
CBI
To be lodged with Banking Security and Fraud Cell (BSFC) of CBI (irrespective of the involvement of a public servant)
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PSBs -More than Rs. 50 crore
CBI
To be lodged with the Joint Director (Policy), CBI, HQ, New Delhi.
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teps taken by Government to curb the generation of black money

Action against black money is an on-going process. Such actions include policy-level initiatives, effective enforcement action on the ground, putting in place robust legislative and administrative frameworks, systems and processes with due focus on capacity building and integration and mining of information through increasing use of information technology.

Recent major steps in this regard include – (i) Constitution of the Special Investigation Team (SIT) on Black Money under Chairmanship and Vice-Chairmanship of two former Judges of Hon’ble Supreme Court, (ii) Enactment of a comprehensive law – ‘The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015’ to specifically deal with black money stashed away abroad, (iii) Constitution of Multi-Agency Group (MAG) consisting of officers of Central Board of Direct Taxes (CBDT), Reserve Bank of India (RBI), Enforcement Directorate (ED) and Financial Intelligence Unit (FIU) for investigation of recent revelations in Panama paper leaks, (iv) Proactively engaging with foreign governments with a view to facilitate and enhance the exchange of information under Double Taxation Avoidance Agreements (DTAAs)/Tax Information Exchange Agreements (TIEAs)/Multilateral Conventions, (v) Proactively furthering global efforts to combat tax evasion/black money, inter alia, by joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information (AEOI) and having information sharing arrangement with USA under its Foreign Account Tax Compliance Act (FATCA), (vi) Renegotiation of DTAAs with other countries to bring the Article on Exchange of Information to International Standards and expanding India’s treaty network by signing new DTAAs and TIEAs with many jurisdictions to facilitate the exchange of information and to bring transparency, (vii) Enabling attachment and confiscation of property equivalent in value held within the country where the property/proceeds of crime is taken or held outside the country by amending the Prevention of Money-laundering Act, 2002 through the Finance Act, 2015, (viii) Enactment of the Benami Transactions (Prohibition) Amendment Act, 2016 to amend the Benami Transactions (Prohibition) Act, 1988 with a view to, inter alia, enable confiscation of Benami property and prosecution of benamidar and the beneficial owner, (ix) Initiation of the information technology based ‘Project Insight’ for strengthening the non-intrusive, information driven approach for improving tax compliance, and (x) Launching of ‘Operation Clean Money’ on 31st January 2017 for collection, collation and analysis of information on cash transactions, extensive use of information technology and data analytics tools for identification of high risk cases, expeditious e-verification of suspect cases and enforcement actions in appropriate cases, which include searches, surveys, enquiries, assessment of income, levy of taxes, penalties, etc. and filing of prosecution complaints in criminal courts, wherever applicable.

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Roll out of GST-1st July 2017; Draft CGST Law and Draft IGST Law approved in the 11th Council Meeting held on 4 March 2017

The GST Council in its 9th Meeting held on 16 January 2017 took note of the work to be completed for the rollout of GST and after deliberations, agreed to extend the date for rollout of GST from 1st April 2017 to 1st July 2017. Steps taken to ensure rollout of GST by 1st July 2017 include approval of the Draft GST Compensation Law by the GST Council in its 10th Meeting on 18 February 2017 held in Udaipur, Rajasthan. Subsequently, the Draft CGST Law and Draft IGST Law were approved in the 11th Council Meeting held on 4 March 2017 at New Delhi. The issues of dual control and cross empowerment were resolved in the 9th Meeting of the GST Council held on 16 January 2017 in which a broad agreement was reached on the issue of cross-empowerment to achieve single interface of taxpayer with the tax administration in the GST regime.

All the decisions taken by the GST Council so far have been based on consensus among the Centre and the States.

At the Central level, the following taxes are being subsumed in GST:

• Central Excise Duty,

• Additional Excise Duty,

• Service Tax,

• Additional Customs Duty commonly known as Countervailing Duty, and

• Special Additional Duty of Customs.

• Cesses and surcharges (Except Clean Energy Cess)

At the State level, the following taxes are being subsumed in GST:

• State Value Added Tax/Sales Tax,

• Central Sales Tax (levied by the Centre and collected by the States),

• Entertainment Tax (other than the tax levied by the local bodies),

• Octroi and Entry tax,

• Purchase Tax,

• Luxury tax, and

• Taxes on lottery, betting and gambling.

• State cesses and surcharges in so far as they relate to supply of goods and services.

GST will simplify and harmonise the indirect tax regime in the country. It is expected to reduce cost of production, thereby making the Indian trade industry more competitive, domestically as well as internationally. It is also expected that introduction of GST will foster a common or seamless Indian market and contribute significantly to the growth of the economy. Further, GST will broaden the tax base, and result in better tax compliance due to robust IT infrastructure.

GST Council is presently deliberating on various issues entrusted to it. All the decisions taken by the Council so far have been based on consensus. GST is going to be implemented soon in the country, therefore, simultaneous and concert efforts are also being made by the government in the form of IT readiness, rigorous consultations, workshops and training sessions for the industry and traders, and all other stake holders involved etc.

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Operation Clean Money; Income Tax Department identifies 17.92 Lakh persons whose tax profiles were not in line with the cash deposits made by them during the demonetization period

Income Tax Department (ITD) has initiated “Operation Clean Money” on 31st January 2017 to leverage technology and data analytics for e-verification of cash deposits made during the demonetization period i.e. 9thNovember to 30th December 2016 to reduce compliance cost for the taxpayers and optimise Government resources.

ITD has identified 17.92 Lakh persons whose tax profiles were not in line with the cash deposits made by them during the demonetization period.

As part of the initial phase, the ITD has sought online response as per pre-defined parameters on source(s) of cash deposited by17.92 Lakh persons through its e-filing portal.

More than 12 lakh responses have been received from 8.38 lakh distinct PANs/persons which are under verification. In case explanation of source of cash is found justified, the verification is closed. The verification is also closed if the cash deposit is declared under Pradhan Mantri Garib Kalyan Yojna (PMGKY).

Appropriate action in non-compliant cases is taken as per law, which includes searches, surveys, assessment of income, levy of taxes, penalties, etc. and filing of prosecution complaints in criminal courts, wherever applicable.

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Submission of old currency notes of Rs. 500 and Rs. 1000; The grace period for Indian citizen residing in India is March 31, 2017 and for Indian citizen resident outside is June 30, 2017

The Specified Bank Notes (Cessation of Liabilities) Ordinance 2016 was promulgated by the President of India (GoI Ordinance No. 10 of 2016 dated December 30, 2016) and it came into effect from December 31, 2016. Subsequently, the Specified Bank Notes (Cessation of Liabilities) Act, 2017 was notified on 28th February, 2017.

A grace period has been provided during which the Specified Bank Notes can be deposited in accordance with this Ordinance/Act by Indian citizens who make a declaration that they were outside India between November 9 and December 30, 2016, subject to conditions that may be specified by notification by the Central Government. The grace period for Indian citizen residing in India is March 31, 2017 and for Indian citizen resident outside is June 30, 2017 as per Government of India notification no. 10 dated December 30, 2016. While there is no monetary limit for exchange for the eligible Resident Indians, the limit for NRIs is as per the relevant FEMA Regulations.

The Reserve Bank, if satisfied after making the necessary verifications, that the reasons for failure to deposit the notes till December 30, 2016 are genuine, will credit the value of notes in the KYC (Know Your Customer) compliant bank account of the tenderer. This facility is available only at five selected RBI Offices (Mumbai, New Delhi, Chennai, Kolkata, and Nagpur).

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Net Indirect Tax collection upto February 2017 stood at Rs 7.72 lakh crore, 22.2% more than the corresponding period last year

Net Direct Tax collections upto February 2017 stood at Rs. 6.17 lakh crore, 10.7% more than the corresponding period last year

Indirect Taxes



          The figures for indirect tax collections (Central Excise, Service Tax and Customs) up to February 2017 show that net revenue collections are at Rs 7.72 lakh crore, which is 22.2% more than the net collections for the corresponding period last year. Till February 2017, about 90.9% of the Revised Estimates (RE) of indirect taxes for Financial Year 2016-17 has been achieved.



            As regards Central Excise, net tax collections stood at Rs. 3.45 lakh crore during April-February, 2016-17 as compared to Rs.2.53 lakh crore during the corresponding period in the previous Financial Year, thereby registering a growth of 36.2%.



            Net Tax collections on account of Service Tax during April-February, 2016-17 stood at Rs. 2.21 lakh crore as compared to Rs.1.83 lakh crore during the corresponding period in the previous Financial Year, thereby registering a growth of 20.8%.



            Net Tax collections on account of Customs during April-February 2016-17 stood at Rs. 2.05 lakh crore as compared to Rs. 1.94 lakh crore during the same period in the previous Financial Year, thereby registering a growth of 5.2%.



            During February 2017, the net indirect tax grew at the rate of 8.4% compared to corresponding month last year. The growth rate in net collection for Customs, Central Excise and Service Tax was 10.9%, 7.4% and 7.6% respectively during the month of February 2017, compared to the corresponding month last year.



Direct Taxes



The figures for Direct Tax collections up to February, 2017 show that net collections are at Rs. 6.17 lakh crore which is 10.7% more than the net collections for the corresponding period last year. This collection is 72.9% of the total Budget Estimates of Direct Taxes for F.Y. 2016-17.



            As regards the growth rates for Corporate Income Tax (CIT) and Personal Income Tax (PIT), in terms of gross revenue collections, the growth rate under CIT is 11.9% while that under PIT (including STT) is 20.8%. However, after adjusting for refunds, the net growth in CIT collections is 2.6% while that in PIT collections is 19.5%. Refunds amounting to Rs.1.48 lakh crore have been issued during April 2016-February 2017, which is 40.2% higher than the refunds issued during the corresponding period last year.

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Seven foreign Re-insurers to set up branches in India

The Insurance Regulatory and Development Authority of India (IRDAI) has issued Certificate of Registration to Seven foreign Re-insurers to set up branches in India. The details are as follows:

1)MunchenerRuckversicherungs-GesellschaftAktiengesellschaft.

2)Swiss Reinsurance Company Ltd.

3) SCOR SE – India Branch

4) Hannover Ruck SE

5) RGA Life Reinsurance Company of Canada

6) Lloyd’s India Reinsurance Branch

7) XL Insurance Company SE, India Reinsurance Branch.

Government through the Insurance Laws (Amendment) Act, 2015, has allowed foreign re-insurers to open their branches in India.

As of now, GIC Re is the only re-insurer fully operational in India. Recently, IRDAI has issued Certificate of Registration to another reinsurance company “ITI Reinsurance Ltd.” to transact reinsurance business in India.

Government has no such proposal under consideration at present to reduce the taxes on the petrol and diesel.

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Taxes on Petrol/Diesel and CNG
The present Customs and Central Excise duties on petrol and diesel are as under:

Petroleum product
Customs Duty
Central Excise Duty

BCD
ACD

Petrol(unbranded)
2.5%
Rs.6 per litre
Rs.21.48 per litre
[Rs.9.48 BED + Rs.6 SAED + Rs.6AED]
Petrol(branded)
2.5%
Rs.6 per litre
Rs.22.66 per litre
[Rs.10.66 BED + Rs.6 SAED + Rs.6 AED]
Diesel(unbranded)
2.5%
Rs.6 per litre
Rs.17.33 per litre
[Rs.11.33 BED + Rs.6 AED]
Diesel (branded)
2.5%
Rs.6 per litre
Rs.19.69 per litre
[Rs.13.69 BED + Rs.6 AED]

BCD - Basic Customs Duty [levied under the Customs Tariff Act]
ACD - Additional Duty of Customs [levied under section 103 of the Finance (No.2) Act, 1998(Petrol) and section 116 of the Finance Act, 1999 (Diesel)], commonly known as Road Cess.
BED – Basic Excise Duty [levied under the Central Excise Tariff Act]
SAED – Special Additional Excise Duty [levied under section 147 of the Finance Act, 2002]
AED – Additional duty of Excise [levied under section 111 of the Finance (No.2) Act, 1998(Petrol) and section 133 of the Finance Act, 1999 (Diesel)], commonly known as Road Cess.

Compressed Natural Gas (CNG) attracts a concessional rate of 5% Basic Customs Duty (BCD) and 14% Basic Excise Duty (BED).

The comparison of Retail Selling Price of Petrol and Diesel, as on 01.03.2017, with neighbouring countries is as under:-

Country
Petrol(Rs./Ltr.)
Diesel(Rs./Ltr.)
India (Delhi)
71.14
59.02
Pakistan
45.26
52.64
Bangladesh
72.56
54.85
Sri Lanka
51.69
41.97
Nepal
64.2349.04


Government has no such proposal under consideration at present to reduce the taxes on the petrol and diesel.

This was stated by Shri Santosh Kumar Gangwar, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.

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