Govt hikes excise duty on petrol, diesel to mop up Rs 2.5K-cr

New Delhi (PTI): The government today increased excise duty on petrol by Rs 0.30 per litre and by Rs 1.17 a litre on diesel to make use of slump in oil prices to garner an additional Rs 2,500 crore.

Basic excise duty on unbranded petrol has been increased from Rs 7.06 per litre to Rs 7.36 and the same on unbranded diesel from Rs 4.66 to Rs 5.83 per litre.


Finance Minister Arun Jaitley said the increase in duty will yield an additional Rs 2,500 crore in revenue during the remainder of the 2015-16 fiscal which ends on March 31, 2016.

After including additional and special excise duty, the total levy on unbranded petrol will be Rs 19.36 per litre as against Rs 19.06 currently.

Similarly, on unbranded or normal diesel, total excise duty after including special excise duty will be Rs 11.83 per litre as compared to Rs 10.66 now.

Basic excise duty on branded petrol has been raised from Rs 8.24 per litre to Rs 8.54 a litre and the same on branded diesel from Rs 7.02 to Rs 8.19 per litre.

This is the second increase in excise duty in less than six weeks. The government had on November 7 raised excise duty on petrol by Rs 1.60 per litre and on diesel by 30 paise a litre.

In anticipation of the hike, oil companies had yesterday announced decrease in petrol price by just 50 paise a litre and by 46 paise on diesel even though oil rates slumping to multi-year low warranted a bigger cut.

Through the previous excise duty hike, the government had mopped up Rs 3,200 crore.
For a government which is facing a likely shortfall in direct tax mobilisation, the two excise duty hikes have yielded Rs 5,700 crore.

Prior to the two hikes since November, the government had previously in four installments raised excise duty on petrol and diesel between November 2014 and January 2015 to take away the reduction in retail rates that was warranted from falling international oil rates.

The four excise duty hikes during this period totalled Rs 7.75 per litre on petrol and Rs 6.50 a litre on diesel. It led to about Rs 20,000 crore in additional revenue to the government, helping it meet its fiscal deficit target.

The government had collected Rs 99,184 crore in excise collections from the petroleum sector in 2014-15. This was Rs 33,042 crore in the first quarter of current fiscal.

1 Comment

  1. Dear readers,

    When the price of crude oil was $147 in December 2008 and the value of rupee was 42 against one US dollar, the price of petrol was Rs 64 per litre.

    “Now as on December 16, the international crude oil price is $$38.45 and the cost of petrol should have come down to around Rs 31 per litre. It can at best be Rs 32,” .

    In one of the steepest ever petrol price hike by Rs7.50 per litre, UPA government earned itself the distinction of increasing petrol prices by about 120% since its inception. The four excise duty hikes during this period totalled Rs 7.75 per litre on petrol surpass the UPA in less than 3 months.

    UPA hiked petrol prices by 120% since its inception

    The consumer did not enjoy the full benefits of the drop in crude oil prices as the Modi govt chose to retain a decent portion of the benefits instead of passing it on.Deregulation is lip service; state-owned oil marketers report same cost and margin structures in petrol price build-up.The money made by the government during this period is used as a cushioning effect so that later when crude oil prices sore up they don’t increase the price immediately.

    The reason behind the falling prices can be attributed to more of politics than economics. Falling prices are affecting Russia and Iran hard, which the U.S. desires. The Indian govt., thus reaping benefits from the current situation has increased taxes to pump in money for the exchequer and to achieve its target of curtailing the fiscal deficit.

    Clearly, despite deregulation, the benefits of competition are being denied to Indian petrol consumers. At the same time creeping Dollar registered 1.00 USD=66.6297 INR. This momentary is nothing but to hide the Dollar climb which they blamed Congress in opposition. When Dollar started to climb Modi’s government will manipulate the excise duty. Thereby robbing the money from consumers and returning them study phase. A modern day ‘Pickpocket’.

    Jai Hind

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