To control the spike in future prices, the central government has extended concessional duties on edible oil imports by six months to March 31, 2023. At present, crude palm, soybean, and sunflower oils imports attract only the 5% agri infra cess and a 10% education cess upon it, meaning a total tax incidence of 5.5%. Basic customs duty waiver was applicable till September 30 as per the notification issued in February 2022.
The central board of indirect taxes and customs in a notification issued on Wednesday has stated an extension of concessional import duties on specified edible oils till March 31, 2023. Currently, the basic customs duty on refined soybean and sunflower oil is 17.5% taking into consideration the 10% social welfare cess, and the effective duty comes to 19.25%. while the basic customs duty of palm oil is 12.5%, and the social welfare cess is 10%. So the effective duty is 13.75%.
In addition to this measure, the government in May had allowed tariff-free imports of crude soya bean and sunflower oils during this financial year and the next. The tax waiver will be subject to an annual cap of 2 million tonnes (mt) for each oil, which will more than sufficient to meet the needs of domestic refiners and ease supplies in the domestic market.
With the decline in international edible oil prices especially in the past three months and lower import duties, the retail prices of edible oils have come down considerably in the domestic market. According to data from the department of consumer affairs, modal retail prices of edible oils mustard, soya, sunflower, and palm oil have declined in the range of 10-20% in the domestic market since June 1.
The edible oil and fat category saw inflation at 7.5% in July 2022 while it was 9.36% in June 2022, mostly contributed by sharp spikes in domestic prices of edible oil in the last year.