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Sunday,26-September-2021

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OMCs go on pause mode as petrol, diesel prices remain unchanged

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Petrol

Petrol and diesel prices in the country remained unchanged on Saturday as oil marketing companies (OMCs) decided to pause the daily revision process and closely study global oil price movement before effecting any change in the domestic market.

Accordingly, petrol price remained at previous days level of Rs 91.27 a litre and diesel Rs 81.73 a litre in the national capital.

Across the country as well, the petrol and diesel price remained static on Saturday but its price levels varied depending on the level of local levies in respective states.

Petrol prices in some states have breached the Rs 100 per litre mark, while premium petrol has been hovering above that level for some time now.

Prior to holding back auto fuel prices, its pump rates had increased sharply on previous four days.

Petrol and diesel prices rose by 15 paisa and 18 paisa per litre respectively on Tuesday, by 19 paisa and 21 paisa per litre respectively on Wednesday, by 25 and 30 paisa respectively on Thursday and by 28 paisa and 31 paisa per litre respectively on Friday after an 18-day break.

IANS had reported earlier that OMCs may begin increasing the retail price of petrol and diesel post state elections as they were incurring losses to the tune of Rs 2-3 per litre by holding the price line despite higher global crude and product prices.

The oil companies had already increased the ATF prices by 6.7 per cent effective this month.

OMCs benchmark retail fuel prices to a 15-day rolling average of global refined products’ prices and dollar exchange rate.

In the last fortnight, global oil prices have hovered in $66-67 a barrel range higher than the levels when petrol and diesel prices were last revised.

Crude prices have jumped around $69 a barrel now.

The price of the two auto fuels had fallen by 16 paisa and 14 paisa per litre respectively on April 15 after a 15 day break when OMCs kept its prices static.

Thereafter revision of fuel prices have been halted.

The OMCs went on price cut for the first time this year on two consecutive days, March 24 and 25, after keeping oil prices steady for past 24 days.

It again reduced the price on March 30.

Thereafter, fuel prices have remained unchanged for past 15 days before falling again on April 15.

In all, petrol prices have fallen by 77 paisa per litre while diesel by 74 paisa per litre in 2021 so far.

Earlier, petrol and diesel prices increased 26 times in 2021 with the two auto fuels increasing by Rs 7.46 and Rs 7.60 per litre, respectively, so far this year.

With global crude prices at around $ 69 a barrel mark, OMCs may have revise fuel prices upwards again if there is any further firming up.

Business

Service given by corporate offices to their branches taxable

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gst

In what may pose challenge to companies having wider spread of employees and branches all across the country, an authority for advance ruling (AAR) had said that managerial and leadership services by a corporate office to its group companies and other construction sites registered in different states is considered as supply of service and would be taxable under GST.

This would mean companies having separate GST registration for its head offices and branches would need to pay GST on the services that a head offices gives to its branches and receive payment for it.

The order on the issue came from Maharashtra AAR or MAAR on application filed by Pune-based B.G. Shirke Construction Technology Private Limited.

The company supplied managerial and leadership services to its branch office and group companies, and received fixed monthly charges from each of them. It asked MAAR whether it is liable to pay tax on such service which gave its order on affirmative going by a similar order given Karnataka AAR on a separate application. This application is now pending before the Karnataka High Court.

Though AAR orders are valid only for the applicants, tax officials use it for other matters as well. These timings also form the basis for amendment to rules of taxation

According to the tax experts, the present ruling with respect to head offices and their branch operations would create a lot of confusion over the issue of valuation of services rendered and valuation taxes.

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Business

India needs 4-5 more SBI sized banks: FM

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 India needs a lot more banks and a lot more large sized ones to meet the growing needs of the country needs in the path of making a smart recovery post pandemic disruptions, Finance Minister Nirmala Sitharaman said on Sunday.

Speaking at 74th Annual General Meeting of Indian Banks’ Association at Mumbai, Sitharaman said there was an urgent need to scale up banking to meet the growing needs of the industry and also to ensure that all economic centres of the country are covered with at least one physical or digital banking presence.

“We need to scale up banking. The need is for at least four-five more SBI sized banks,” she said, while reminding that the amalgamation exercise among public sector banks have helped in moving ahead with creation of large banks.

Having done two rounds of bank consolidation earlier, the Central government in 2019 decided to merge six disparate and weak PSBs into four in one stroke.

Accordingly, Punjab National Bank (PNB) took over Oriental Bank of Commerce and United Bank of India; Allahabad Bank became part of Indian Bank; Canara Bank subsumed Syndicate Bank; and Andhra Bank and Corporation Bank merged with Union Bank of India. Earlier, State Bank of India (SBI) with five of its associate banks while Vijaya Bank and Dena Bank were merged with Bank of Baroda.

Sitharaman lauded the efforts of the PSBs to see through that the amalgamation of banks during the pandemic period was completed without any inconvenience to customers.

She said that that in the post pandemic world, hanks would need to change their mindset and the way they conduct their businesses.

Digitisation, the Finance Minister said has changed a lot of how businesses are done and banks will now need to think futuristically and keep pace with evolving technology.

Sitharaman also asked the IBA to conduct a digitised mapping of each district of the country with regard to presence of bank branch operation and their location. This, she said, would help to plug areas of gaps with no banking presence effectively.

“Not necessary to have physical banking presence everywhere. The country’s optic fibre network has covered two-third of about 7.5 lakh panchayats. This could be used to deliver banking services in unconnected areas as well,” the Finance Minister said.

She also asked banks to develop models and better understanding of businesses focused on exports as country has set a $2 trillion export target by 2030.

With regard funding for the infra sector, she said that a government sector development financial institution (DFI) is coming up soon.

Sitharaman said that Indian economy is at a critical stage of a reset and banks would form the backbone for it by providing best of the financial services.

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Business

Diesel price rise again, petrol stable amid volatility in global oil markets

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Petrol

Auto fuel prices in the country have maintained stability amid volatility in global oil prices, but the oil marketing companies on Sunday increased the pump price of diesel marginally while maintaining stability in petrol prices.

Accordingly, diesel prices increased by 25 paise per litre in the national capital to Rs 89.07 per litre on Sunday while petrol price remained unchanged for the 21th consecutive day, according to Indian Oil Corporation, country’s largest fuel retailer.

Diesel price was raised on Friday as well by 20 paise per litre which oil marketing company sources said was based on the global price movement of the fuel.

OMCs have preferred to maintain their watch prices on global oil situation before making any revision in prices.

The wait and watch plan of OMCs has come to the relief of consumers as no revision has come during a period when crude prices were on the rise over a shortfall in the US production and inventories and a pick up in demand. This would have necessitated about Rs 1 increase in price of petrol and diesel.

In Mumbai, the petrol price was stable at Rs 107.26 per litre while diesel rate increased to about Rs 96.68 a litre.

Across the country as well petrol price remained static on Sunday while diesel price increased marginally.

Fuel prices have been hovering at record levels on account of 41 increases in its retail rates since April this year. It fell on a few occasions but largely remained stable.

On Sunday, global benchmark Brent crude rose over $78 a barrel. Oil rates are up 2 per cent for the week and this is the fifth weekly gain. Since September 5, when both petrol and diesel prices were revised, the price of petrol and diesel in the international market is higher by around $6-7 per barrel as compared to average prices during August.

Under the pricing formula adopted by oil companies, rates of petrol and diesel are to be reviewed and revised by them on a daily basis. The new prices become effective from morning at 6 a.m.

The daily review and revision of prices is based on the average price of benchmark fuel in the international market in the preceding 15-days, and foreign exchange rates.

But, the fluctuations in global oil prices have prevented OMCs to follow this formula in totality and revisions are now being made with longer gaps. This has also prevented companies from increasing fuel prices whenever there is a mismatch between globally arrived and pump price of fuel.

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