Base import tax on crude palm oil reduced from 10% to 2.5%
According to a government notification, the government has cut base import taxes on palm oil, soya oil and sunflower oil, as the world’s largest vegetable oil buyer tries to calm the rise in record prices.
The reduction in taxes could bring down the prices of edible oils in India and boost consumption, effectively increasing overseas purchases by the South Asian country.
The government in a late notification said that the base import tax on crude palm oil has been reduced from 10 per cent to 2.5 per cent, while the tax on crude soya oil and crude sunflower oil has been reduced from 7.5 per cent to 2.5 per cent. Friday. Base import tax on refined grades of palm oil, soya oil and sunflower oil has been reduced from 37.5 per cent to 32.5 per cent.
After the deduction, imports of crude palm oil, soya oil and sunflower oil will be taxed at 24.75 per cent in total, including 2.5 per cent base import duty and other taxes, while taxes on refined grades of palm oil, soya oil and sunflower oil will be taxed. It will take Total 35.75 percent tax.
India meets more than two-thirds of its edible oil demand through imports and has been struggling to contain a rally in local oil prices for the past few months.
The country imports palm oil mainly from top producers Indonesia and Malaysia, while other oils, such as soy and sunflower, come from Argentina, Brazil, Ukraine and Russia.
Govindbhai Patel, managing director of trading firm GG Patel & Nikhil Research Company, said the reduction in taxes will bring down edible oil prices ahead of major festivals, when the demand for edible oil in the country will pick up.
New Delhi cut import tax on palm oil, soya oil and sunflower oil, but retained import duty on crude rapeseed oil at 38.5 per cent, said BV Mehta, executive director, Solvent Extractors Association of India.
“Import tax on rapeseed oil also needs to be reduced as the price has almost doubled in a year,” Mehta said.
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