Budget 2019: The additional levies imposed by the Budget on transport fuels would net `25,000 crore per year for the Centre. Half of this amount, being cess proceeds, won’t need to be shared with the states.
The Budget proposed a hike in the special additional excise duty on diesel and petrol by `1 per litre and an increase in the road and infrastructure cess on these items by a similar amount.
The Budget has also proposed to introduce basic excise duty on petroleum crude oil and tobacco.
“Tobacco products and crude attract national calamity and contingent duty (NCCD). In certain cases this levy has been contested on the ground that there is no basic excise duty on these items. To address this issue, a nominal basic excise duty is being imposed,” said finance minister Nirmala Sitharaman.
A `1 per tonne of excise duty has been levied on domestic crude oil production and a similar amount as Customs duty will be charged on imported crude. The two together will contribute `25 crore to the exchequer. Till now, an NCCD of `50 per tonne used to charged on petroleum crude oil.
Also, a nominal excise duty across tobacco products has also been introduced. In doing so, the government for the first time has used a provision in the constitution of the goods and services tax that allowed levy of such a duty on tobacco products which is under the ambit of GST.
Petroleum crude is not under GST ambit.
It has also been proposed to increase Customs duty on gold and other precious metals from 10% to 12.5%.
The government has been increasing its cess collection over the years. It jumped from `63,000 crore in FY16 to `1 lakh crore in FY17 but dipped to `71,000 crore in FY18 dues to introduction of GST which subsumed all taxes.
However in the Budget of 2018, the government introduced a `8 per litre road and infrastructure cess on sale of petrol and high-speed diesel. This replaced the `6 per litre additional excise duty on these fuel. The cess collection is estimated to jump to `1.78 lakh crore in FY19.