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Excise duty hiked by Rs 10 per litre on petrol, Rs 13 on diesel; consumers unaffected

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Excise duty hiked by Rs 10 per litre on petrol, Rs 13 on diesel; consumers unaffected

New Delhi: The government Tuesday announced a Rs 13 per litre hike in excise duty on diesel and a Rs 10 per litre hike in excise duty on petrol in an attempt to shore up more revenues even as demand remains subdued due to the lockdown to counter the spread of COVID-19 pandemic.

Finance Ministry officials said the hike in excise duty, which comes into effect from Wednesday, will not result in hike in retail prices of petrol and diesel for the consumers. This is the second hike in excise duty on fuel in two months by the Centre and comes after a hike in value-added tax by several states over the last few days.

A government notification said that the special excise duty on petrol was hiked by Rs 2 per litre to Rs 12 per litre and by Rs 5 per litre to Rs 9 per litre for diesel. Road cess on both petrol and diesel has also been increased by Re 8 per litre to Rs 18 per litre, the notification added.

The government had earlier on March 14 hiked the excise duty, and road and infrastructure cess by Rs 3 per litre each for both petrol and diesel. Government sources said the revenue generated from these duties shall be used for infrastructure and other developmental expenditure.

In its amendments to the Finance Act, the government had in March increased the caps on special additional excise duty by Rs 8 per litre on both petrol and diesel, taking the cap to Rs 18 per litre on petrol and Rs 12 per litre on diesel. The previous year’s cap had stood at Rs 10 per litre for petrol and Rs 4 per litre for diesel. The change in the cap had given the government the flexibility to raise duties on petrol and diesel by another Rs 8 per litre each.

Roughly, every rupee hike in excise duty is expected to yield Rs 13,000-14,000 crore annually. This round of hike in excise duties by a combined total of Rs 23 per litre for petrol and diesel is likely to result in a revenue gain of around Rs 2.85 lakh crore this fiscal.

Retail prices of petrol and diesel already increased in the national capital after a hike in VAT by the Delhi government. The price of diesel jumped by Rs 7.1 per litre to Rs 69.4 per litre and the price of petrol rose by Rs 1.7 per litre to Rs 71.3 per litre in Delhi on Tuesday.

The move brought diesel prices in Delhi up by 2 percent from the beginning of the year and petrol prices down by just 5.2 percent even as international crude prices have crashed by around 57 percent from $66.25 per barrel to $28.5 per barrel. Post the hike, central and state taxes account for 55 percent of the price of petrol and 50.5 percent of the price of diesel at pumps in the capital.

The Delhi government’s move came on the heels of VAT hikes on petrol and diesel in Tamil Nadu and Haryana. On Sunday, the Tamil Nadu government raised VAT on Petrol and diesel resulting in a price hike of Rs 3.25 per litre of petrol and Rs 2.50 per litre of diesel. Haryana hiked VAT on petrol by Rs 1 per litre and VAT on diesel by Rs 1.1 per litre last week.


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