The government has decided to impose additional excise duty on petrol and diesel by INR₹ 1 per litre.
With this, fuel prices across the country will rise by a significant margin. Finance Minister Nirmala Sitharaman made the announcement in the Budget speech today. Petroleum products, being cash cows for the exchequer, fetch huge revenue, and an increase in excise duty will hurt consumers.
For petrol the government charges excise duty of INR₹ 17.98 per litre, while VAT levied on petrol amounts to INR₹ 14.98. The overall price charged from dealers amounts to INR₹ 32.96 per litre.
In the case of diesel the government charges INR₹ 13.83 per litre excise duty and INR₹ 9.47 per litre VAT. The price charged to dealers amounts to INR₹ 23.3 per litre.
Based on the global crude prices, the government cuts the price of duty. However, since 2014, the government has been found increasing excise duty even as global prices fell, leading to an increase in the central government’s revenue.
As per the Ministry of Finance’s revenue collection the centre collected over INR₹ 2.579 lakh crore by levying taxes on the petroleum products in FY19. This is 4 times that of the revenue collection in 2013-14.
Source : Various