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Seeking to maximise gains from the ongoing slump in crude oil prices, the government today raised excise duty on petrol by 37 paise per litre and the duty on diesel by Rs 2 per litre. This is the third duty hike in less than two months, which will help the centre mop up an additional Rs 4,300 crore in the remainder of the current financial year ending March 2016.
Through the latest revision, basic excise duty on every litre of unbranded petrol has been raised from Rs 7.36 to Rs 7.73, while the duty on unbranded diesel has been increased from Rs 5.83 per litre to Rs 7.83 per litre. “This additional resource mobilisation is likely to yield Rs 4,300 crore in the remaining part of the year,” revenue secretary Hasmukh Adhia said in a tweet.
He added that the increase in excise duty on petrol and diesel will not result in any increase in the current retail price. On Thursday, Oil Marketing Companies (OMCs) had slashed prices of petrol by 63 paise per litre along with a Rs 1.06 per litre cut in diesel prices. But this did not pass on the full benefit of the reduction in global oil prices to consumers.
After including additional and special excise duty, the total levy on unbranded petrol will be Rs 19.73 per litre as against the current levy of Rs 19.36. Also, total excise duty on unbranded diesel will be Rs 13.83 per litre, compared to Rs 11.83 currently.
The government had last revised excise duty on December 16 when the duty on petrol was raised by Rs 0.30 per litre and by Rs 1.17 a litre on diesel. Basic excise duty on unbranded petrol was increased from Rs 7.06 per litre to Rs 7.36 and the same on unbranded diesel from Rs 4.66 to Rs 5.83 per litre during that hike. That hike is estimated to garner an additional Rs 2,500 crore in the remaining of the current fiscal year.
Prior to that, the excise duty on the two deregulated automobile fuels was revised on November 7. The duty on petrol by raised by Rs 1.60 per litre and on diesel by 30 paise a litre. The government had swept up Rs 3,200 crore through that hike. The three excise duty hikes since November had followed a round of four consecutive duty increases between November 2014 and January 2015.
That series of hikes in four installments led to excise duty on petrol rising by Rs 7.75 per litre and diesel by Rs 6.50 per litre and gave the government additional Rs 22,000 crore last fiscal (2014-15). The centre’s total collection from excise duty in the petroleum sector stood at Rs 99,000 crore last fiscal and Rs 33,000 crore in the first quarter of current fiscal.
Asked whether the huge increase in excise duty is depriving the consumers of the gains from a possible reduction in retail prices of petrol and diesel, oil minister Dharmendra Pradhan told Business Standard last week that the OMCs have passed on the benefit of crude price decline to consumers through 20 reductions in retail petrol prices and 16 cuts in diesel prices, leading to a cumulative decline of around Rs 13 per litre in both the fuels in the last one year. He had also said the government could look at offloading excise duty in case prices rise in future.
