Tax cuts on fuels can reprieve the road freight segment

Struggling to make a come back after being hit by the pandemic, the road freight segment is now grappling with the ever-increasing high diesel prices.

As per reports, the constant rise in fuel prices has caused the freight rates to sour up in several sectors. However, it is the road freight segment that is enduring the maximum burns.  

All long-term contracts have a fuel escalation clause but it is only the demand-supply mechanism that holds the key and determines market/spot rates of vehicles when it comes to road freight. Fuel constitutes 40-50% of the transportation cost and many are finding the transportation business unviable due to the rising diesel prices. Also, unlike other sectors, the transport industry did not get any stimulus from the government.”

~ Vineet Agarwal, president, Assocham and MD, Transport Corporation of India Ltd.

The industry, while urging the government to grant relaxation for their quick and smooth recovery, expects the government to allow the logistics sector to claim input tax credit (ITC) on fuel purchases to help reduce the cost. “There is also a need for a coordinated and calibrated reduction in taxes both by the states and the Centre, Mr Agarwal suggested.

The fuel price recorded as of 1st March in the national capital was Rs 89 per litre for Petrol and diesel reaching a new high of Rs 86.30 per litre in Mumbai.

Other states like Kerala, Bengaluru and Chennai are also breaking records in terms of fuel rates with petrol and diesel prices touching the Rs 90 mark.

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