 "Government eyes Rs 3,200 cr from fuel excise hike")
Taking advantage of the below-$50-a-barrel price for crude oil in international markets, the government on Friday night announced a hike in excise duties on petrol by Rs 1.60 a litre and on diesel by 40 paise a litre.
The increased duties will come into effect from Saturday. However, the oil marketing companies will not raise retail prices despite the government measure.
Though the two measures will not add much, these will help the government raise resources at a time when it fears less-than-projected revenue because of an anticipated shortfall in direct tax collection and a slippage in disinvestment proceedings.
Indirect tax collection is on the upswing, rising by 36.5 per cent in the first seven months of the current fiscal year, if duty hikes on petroleum and other additional measures such as withdrawal of excise duty sops and increase in the service tax rate are taken into account.
If not, the indirect tax kitty grew 13.5 per cent in this period, Finance Minister Arun Jaitley had revealed earlier this week.
The government had collected Rs 99,184 crore in excise from the petroleum sector in 2014-15, of which almost Rs 20,000 crore came from the excise duty hike in petroleum.
According to the latest figures released by the finance ministry, excise duty collection rose 69.6 per cent at Rs 1.25 lakh crore in the first half of the current fiscal year.
"Revenue from excise duty on petroleum forms a significant portion of the government's collections. With the increase in excise duty on motor spirit and diesel, government revenue will be augmented," said Saloni Roy, senior director, Deloitte in India.
A notification by the Central Board of Excise and Customs (CBEC) said the basic excise duty on unbranded or normal petrol was increased from Rs 5.46 per litre to Rs 7.06 a litre.
After including the additional and special excise duty, the total levy on petrol will be Rs 19.06 per litre as against Rs 17.46 at present. Similarly on unbranded or normal diesel, the excise duty has been increased from Rs 4.26 per litre to Rs 4.66 a litre. After including the special excise duty, the total incidence of excise duty on diesel will be Rs 10.66 per litre as against Rs 10.26 now.
The excise duty on branded petrol has been hiked from Rs 6.64 to Rs 8.24 per litre. The special and additional excise duty of Rs 12 per litre will continue as before. On branded diesel, the excise duty has been increased from Rs 6.62 to Rs 7.02 per litre. The additional excise duty of Rs 6 per litre will continue as before.
"There will be no change in retail prices of petrol and diesel for now. We are not passing on the excise duty hike," a top oil company executive said.
The government had earlier raised the excise duty on petrol and diesel between November 2014 and January 2015 in four phases. This yielded money to the exchequer while taking into account any reduction in retail rates that was warranted from falling international oil prices.
The four excise duty hikes during this period totalled Rs 7.75 per litre on petrol and Rs 6.50 a litre on diesel.
Tax on petrol and diesel was first raised by Rs 1.50 a litre each from November 12, 2014. Then again from December 2, 2014, the excise duty on petrol was raised by Rs 2.25 per litre and by Rs 1 on diesel. This was followed by the government hiking the excise duty on petrol and diesel by Rs 2 per litre each from January 2, 2015, and a similar proportion from January 16, 2015.
It is not only the Centre that is shoring up revenue on softening prices of the Indian basket of crude oil in the international markets. State governments are also doing it too. For instance, the Delhi government had in July raised the value-added tax on petrol from 20 per cent to 25 per cent and diesel from 12.5 per cent to 16.6 per cent, increasing petrol prices by Rs 2.78 a litre and diesel prices by Rs 1.83 a litre.
The four successive excise duty hikes in petrol and diesel between November 2014 and January 2015 - totalling Rs 7.75 per litre on petrol and Rs 6.50 a litre on diesel - generated an additional revenue of Rs 30,000 crore in the first five months (April-August) of the current fiscal. The contribution from the petroleum sector, therefore, accounted for a bulk of the additional Rs 36,500 crore mopped up by the government as total excise collection during the period. Centre's total excise collection jumped 70 per cent to Rs 1.02 lakh crore in the five months period from Rs 60,663 crore in the corresponding period last fiscal.