Govt Looks to Reduce Tax on Marine Diesel Oil to Boost Coastal, Inland Shipping
By: Admin | September 24, 2024 | Categories: TAX News | 4 Min Read
The Indian government is working on reducing the tax burden on marine diesel oil (MDO) to support coastal and inland shipping sectors. The Ministry of Ports, Shipping, and Waterways (MoPSW) is advocating for MDO to be brought under the Goods and Services Tax (GST) as part of broader efforts to lower costs, enhance competitiveness, and attract more cargo to this eco-friendly transportation mode.
Marine fuel consumption accounts for just 1% of India’s total fuel demand, so any revenue loss from this move would be minimal, and states could be compensated through the GST system. The MoPSW is in discussions with the Ministry of Finance and various states, seeking approval for this tax reduction and exploring additional incentives.
Reducing taxes on MDO would cut operational costs for coastal shipping, where oil expenses represent nearly 40% of total costs. Bringing MDO under GST, similar to bunker fuel used by foreign-going vessels, would ensure parity and boost the sector’s growth.
Key Points:
- Oil Costs: Coastal ships and inland vessels rely on MDO, which forms a significant part of their operational costs.
- Government Incentives: The government has already initiated projects under the Sagarmala programme to promote coastal shipping and inland waterways.
- Potential Savings: Placing MDO under GST could reduce operational expenses and increase competitiveness in the sector.
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