Government on Saturday hiked excise duty on petrol and diesel by a steep Rs 3 per litre each to garner about Rs 39,000 crore additional revenue as it repeated its 2014-15 act of not passing on gains arising from slump in international oil prices.
Retail prices of petrol and diesel will not be impacted bythe tax changes as state-owned oil firms adjusted them against the recent fallin oil prices and the likely trend in the near future, industry officials said.
According to a notification issued by the Central Board ofIndirect Taxes and Customs, special excise duty on petrol was hiked by Rs 2 toRs 8 per litre in case of petrol and to Rs 4 a litre from Rs 2 in case ofdiesel.
Additionally, road cesswas raised by Re 1 per litre each on petrol and diesel to Rs 10.
With this, the total incidence of excise duty on petrol hasrisen 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 Modigovernment took office in 2014 and that on diesel was Rs 3.56 a litre.
Officials said theincrease in excise duty will result in annual increase of government revenuesby about Rs 39,000 crore. The gains during the remaining three weeks of thecurrent fiscal would be less than Rs 2,000 crore.
Petrol and diesel prices, which are changed on a dailybasis, were cut by 13 paise and 16 paise respectively as oil companies adjustedthe excise duty hike against the drop in prices that warrants frominternational rates slumping the most since the Gulf war.
Petrol now cost Rs 69.87 a litre in Delhi and a litre ofdiesel comes for Rs 62.58.
The government had between November 2014 and January 2016raised excise duty on petrol and diesel on nine occasions to take away gainsarising from plummeting global oil prices.
In all, duty on petrol rate was hiked by Rs 11.77 per litreand that on diesel by 13.47 a litre in those 15 months that helped government’sexcise mop up more than double to Rs 2,42,000 crore in 2016-17 from Rs 99,000crore in 2014-15.
It cut excise duty by Rs 2 in October 2017 and by Rs 1.50 ayear later. But it raised excise duty by Rs 2 per litre in July 2019.
Government sources saidthat while the benefit of reduction of crude prices in the first quarter ofthis year has significantly gone to the consumer, the Centre has taken thisstep of increasing duty to raise some revenue in view of a tight fiscalsituation. This would help in generating the resources for development ofinfrastructure and other developmental items of expenditure, they said.
Benchmark crude oil prices have halved since January to USD 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 March 14 for petrol, and from Rs 69.17 to Rs 62.58 for diesel during the same period in Delhi).