Excise duty on petrol and diesel was on Saturday hiked by Rs 3 per litre as the government looked to mop up gains arising from fall in international oil prices.
This move is an attempt to increase government revenues at a time when tax collections have fallen amid the weakest economic growth in over six years, according to Reuters.
The excise duty on the fuels was hiked by Rs 3 per litre, the government said in a gazette notification.
#JustIn | Govt has hiked excise duty on petrol & diesel by Rs 3/litre – Special additional excise duty on petrol & diesel increased by Rs 2/litre whereas the govt has hiked the road, infra cess by Rs 1/litre pic.twitter.com/U7bcirSDV0
— CNBC-TV18 (@CNBCTV18Live) March 14, 2020
Special excise duty on petrol was hiked by Rs 2 to Rs 8 per litre in case of petrol and to Rs 4 in case of diesel, an official notification said.
Additionally, road cess on petrol was raised by Rs 1 per litre each on petrol and diesel to Rs 10, according to a PTI report.
With this, the total incidence of excise duty on petrol has risen to Rs 22.98 per litre and that on diesel to Rs 18.83.
The tax on petrol was Rs 9.48 per litre when the Narendra Modi government took office in 2014 and that on diesel was Rs 3.56 a litre.
Officials said the increase in excise duty will result in annual increase of government revenues by about Rs 39,000 crore. The gains during the remaining three weeks of the current fiscal would be less than Rs 2,000 crore, PTI said.
Representational image. Reuters.
Petrol and diesel prices, which are changed on a daily basis, were cut by 13 paise and 16 paise respectively as oil companies adjusted the excise duty hike against the drop in prices that warrants from international rates slumping the most since the Gulf war.
Petrol now cost Rs 69.87 a litre in Delhi and a litre of diesel comes for Rs 62.58.
The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.
In all, duty on petrol rate was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped government’s excise mop up more than double to Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.
It cut excise duty by Rs 2 in October 2017 and by Rs 1.50 a year later. But it raised excise duty by Rs 2 per litre in July 2019.
The revised prices for petrol per litre in metros are as follows: Delhi (Rs 69.87), Kolkata (Rs 72.57), Mumbai (Rs 75.57) — all down by Rs 0.13 — and Chennai (Rs 72.57), down Rs 0.14.
The revised prices for diesel per litre in metros are as follows: Delhi (Rs 62.58), Kolkata (Rs 64.91) — a decline by Rs 0.16, Mumbai (Rs 65.51) — and Chennai (Rs 66.02), down Rs 0.17.
Government sources said that while the benefit of reduction of crude prices in the first quarter of this year has significantly gone to the consumer, the Centre has taken this step of increasing duty to raise some revenue in view of a tight fiscal situation. This would help in generating the resources for development of infrastructure and other developmental items of expenditure, they said.
Benchmark crude oil prices have halved since January to $32 per barrel. In sync with this, the prices of petrol and diesel have also come down by more than Rs 6 per litre (from Rs 76.01 a litre on January 11, 2020 to Rs 69.87 a litre on 14 March for petrol, and from Rs 69.17 to Rs 62.58 for diesel during the same period in Delhi).
Taxes on petrol and diesel, which account for more than a third of retail fuel prices, are one of the biggest sources of income for the government.
–With agency inputs
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Updated Date: Mar 14, 2020 15:19:40 IST
