Excise Duty Hiked on Petrol, Diesel

Excise Duty Hiked on Petrol, Diesel
Highlights

Ahead of the Budget, the government on Saturday hiked excise duty by Rs. 1 per litre on petrol and by Rs. 1.50 on diesel - the third increase this month - to mop up over Rs. 3,200 crore in additional revenue.

Ahead of the Budget, the government on Saturday hiked excise duty by Rs. 1 per litre on petrol and by Rs. 1.50 on diesel - the third increase this month - to mop up over Rs. 3,200 crore in additional revenue.

The hike will not result in any increase in retail selling price of the two fuels, as it would adjust against the reduction in rates that may have been possible because of the slide in international oil prices.

Basic excise duty on unbranded or normal petrol has been increased from Rs. 8.48 per litre to Rs. 9.48 while that on unbranded diesel raised from Rs. 9.83 to Rs. 11.33, a Central Board of Excise and Customs (CBEC) notification said.

The increase in excise duty will fetch the government over Rs. 3,200 crore during the remainder period of the ongoing fiscal year.

This is the third hike in excise duty this month as the government has made use of the slump in oil prices to shore up resources, at a time when its disinvestment kitty is likely to fall way short of target.

The government had on January 16 hiked the excise duty by Rs. 0.75 per litre on petrol and by Rs. 2 on diesel to mop up over Rs. 3,700 crore in additional revenue. Prior to that, the government on January 2 had hiked the excise duty on petrol by Rs. 0.37 per litre and Rs. 2 on diesel to mop up a little less than Rs. 4,400 crore.

The three hikes in excise duty this month takes the number of times tax rates on the two fuel have been raised this fiscal year to five.

On December 17, excise duty was hiked by Rs. 0.30 per litre on petrol and by Rs. 1.17 per litre on diesel to garner Rs. 2,500 crore.

Previously, on November 7, excise duty on petrol was hiked by Rs. 1.60 per litre while that on diesel was increased by 30 paise to raise Rs. 3,200 crore.

With the five increases, the government is expected to mop up over Rs. 17,000 crore to meet its budgetary deficit.

Prior to these, the government had in four installments raised the excise duty on petrol and diesel between November 2014 and January 2015 to lessen the reduction in retail rates, which followed 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. If the government would not have raised these duties, consumer price of petrol and diesel should have been lower by 11.77 a litre and Rs. 13.30 per litre respectively.

Petrol currently costs Rs. 59.99 per litre in Delhi while diesel costs Rs. 44.71 a litre.

After including additional and special excise duty, the total levy on unbranded petrol will be Rs. 21.48 per litre as against Rs. 20.73 currently.

Similarly, on unbranded or normal diesel, total excise duty after including special excise will be Rs. 17.16 per litre compared with the Rs. 15.66 now.

The basic excise duty on branded petrol has been raised from Rs. 9.66 per litre to Rs. 10.66 and that on branded diesel from Rs. 12.19 to Rs. 13.69 per litre, the CBEC notification said.

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

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