Amid the uproar over high petrol and diesel prices even as the international crude oil prices have remained much lower due to high excise duty, the government has told the Parliament that the price of one litre of petrol is only Rs 34 a litre before tax and dealer commission.
Minister of State for Finance Shiv Pratap Shukla gave details of prices of petroleum products in a written reply to the Lok Sabha, in which he said that incidence of taxes and dealers commissions work out to be 96.9% in case of petrol and 60.3% for diesel, news agency PTI reported.
According to his reply, petrol will cost only Rs 34.04 per litre and diesel only Rs 38.67 per litre without any tax and dealer’s commission.
However, it is practically not possible to scrap 100% tax and dealer’s commission. Petrol and diesel prices, meanwhile, were cut on Friday as the crude oil slumped to a new low $55 a barrel. Petrol was sold for Rs 70.46 per litre in Delhi, diesel was available for Rs 64.39 per litre on Friday.
In October, when oil prices were hovering around $84-85, the government had announced an excise duty cut of Rs 1.5 per litre on both petrol and diesel and also asked oil companies to absorb the loss of Re 1 per litre. Following the Centre’s decision, some state governments also announced VAT cut up to Rs 2.5 per litre.
As a result of the cut in excise duty, some economists expressed worry of the shortfall in the total indirect collection. A report SBI Research said that the government is staring at a shortfall of Rs 70,000 crore due to excise duty cut on fuel and lower than expected GST collection.