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Taking advantage of the fall in global crude oil prices, the Finance Ministry on Thursday hiked the excise duty on petrol and diesel by ₹1.50 a litre with immediate effect. However, the hike will not be passed on to retail consumers for now.
Since the global prices have come down, oil retailers are making ‘over-recoveries’, or profits, on sale of petrol and diesel. Revenue Secretary Shaktikanta Das said the excise duty increase will be absorbed by the public sector oil retailers.
More revenue for Govt With the excise hike, the Finance Ministry also hopes to mop up ₹6,000-₹7,000 crore in the remaining five months of the current fiscal.
This will help boost indirect tax collections (customs duty, excise duty and service tax) which, at present, have risen only 5.6 per cent so far this fiscal. The Budget targets an increase of 25.8 per cent this fiscal.
According to the notification issued by the Central Board of Excise and Customs (CBEC), the basic excise duty on unbranded petrol will be ₹2.70 a litre, up from ₹1.20 earlier.
On branded petrol, the duty has been raised to ₹3.85 a litre from ₹2.35.
Apart from a basic rate, there is a special additional excise duty and an additional excise duty on both branded and unbranded petrol. For unbranded diesel, the basic excise duty will be ₹2.96 a litre, up from ₹1.46, while on branded diesel it has been raised to ₹5.25 a litre, from ₹3.75. Though there is no special additional excise duty on either branded or un-branded diesel, there is an additional excise duty apart from the basic excise duty.
On Thursday, Brent crude was down to $78.98 a barrel. On Wednesday, the price at which Indian refiners buy their crude oil supplies stood at $78.92 a barrel against $105 on April 1.
Effect on consumers Krupa Venkatesh, Senior Director, Deloitte in India, said this (duty hike) will definitely dampen the enthusiasm generated over the recent reduction in petrol and diesel prices, since OMCs would inevitably pass on the burden to the consumer.
“For industrial consumers, since there is no cenvat credit on these goods, the increase will add to operating cost,” she said.
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