Government raises excise duty on petrol, diesel

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New Delhi | Published: December 17, 2015 12:11:32 AM

Move to add extra Rs 2,500 cr to exchequer for remaining fiscal

The government on Wednesday raised excise duty on petrol by Rs 0.30 a litre and on diesel by a steep by Rs 1.17 a litre, taking advantage of the low global crude oil price in a move that would add an extra Rs 2,500 crore to the exchequer for the rest of the fiscal.

Since November 2014, the government has raised excise duty on petrol by Rs 9.65 a litre and on diesel by Rs 7.97 a litre in six installments, reducing the leeway oil marketing companies IOC, HPCL and BPCL have in passing on the fall in global prices to consumers.

Expecting the hike in duty, fuel retailers on Tuesday lowered petrol price by just 50 paise a litre and diesel price by 46 paise despite oil rates slumping to multi-year lows warranting a steeper price cut. Domestic prices of petrol and diesel are governed by their prices in the global market as India follows trade parity pricing. Basic excise duty on unbranded petrol has been increased on Wednesday from R7.06 to R7.36 a litre and the same on unbranded diesel from Rs 4.66 to Rs 5.83 a litre.

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

On unbranded or normal diesel, total excise duty after including special excise duty will be Rs 11.83 per litre compared to Rs 10.66 earlier.

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.

The government’s receipts from excise duty collection during April-November period rose 67.1% to Rs 1.7 lakh crore partly on account of duty increase in fuels and withdrawal of duty benefits given to automobiles and consumer goods.

Total tax receipts from customs, excise and service tax during the period had increased 34.3% from the same period a year ago to Rs 4.38 lakh crore. Finance minister Arun Jaitley expects to mop up Rs 6.46 lakh crore from indirect taxes in FY16, a growth of around 19% over last year.  The two percentage point reduction in excise duty on consumer durables to 10% and the 4-6% cut in the duty on cars announced as a stimulus at the beginning of last fiscal was withdrawn in last December. This fiscal, the government raised the clean energy cess from Rs 100 to Rs 200 a tonne of coal to finance clean energy initiatives.

M S Mani, senior director, Deloitte in India, said: “The increase in the excise duties on petrol may not significantly impact corporates; however, the steep increase in the excise duties on diesel, which is a key industrial input, would significantly impact business by driving up their production costs. For consumers, this would mean an added burden either directly or indirectly. For consumers who are planning to go for diesel cars, it’s necessary to rethink.”

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