The proposal to hike taxes on diesel cars is the latest in a series put forth by the government in recent days as it seeks to fend off widespread criticism that weak leadership and policy inertia are fuelling a slowdown of Asia's third-biggest economy.
Also read: Five facts on why additional taxes on diesel cars won’t help
Reddy also said that no date had yet been finalized for the meeting of the empowered group of ministers on diesel, LPG and kerosene.
The minister had last week ruled out any price hike in diesel, kerosene and LPG at least in the near future.
"We are not touching the prices of diesel, LPG and Kerosene as of now," he had said.
Unlike petrol, the prices of the three fuels are administered by the government, which also bears the subsidy burden for them.
Oil marketing companies had last month raised the price of petrol by almost 10 per cent, prompting talk of a hike in administered fuels as well.
This was followed by a partial rollback of Rs 2.50, and came with the assurance from the chiefs of the oil marketing companies that prices would be reviewed every fortnight and declining crude prices may help being down the price of petrol in the future.