Govt hikes excise duty on petrol by Re 1/litre and diesel by Rs 1.50 /litre

01 Feb 2016 Evaluate

Government has raised excise duty on petrol and diesel, the third increase in duties in the month of January, to mop up over Rs 3,200 crore in additional revenue, netting in all Rs 17,000 crore in three months. The duty on petrol has been raised by Re 1 per litre, while that on diesel by Rs 1.50 per litre. The hike did not result in any increase in retail selling price of the two fuels as it was adjusted against the reduction in rates that may have been possible because of the slide in international oil prices. This is the third hike in excise duty in January as the government made use of the slump in oil prices to shore up resources at a time when its disinvestment kitty is likely to fall way short of target.

As per the notification of the Central Board of Excise and Customs (CBEC), the total levy on unbranded petrol will be Rs 21.48 per litre as against Rs 20.73 currently, after including additional and special excise duty. On unbranded or normal diesel, total excise duty after including special excise duty will be Rs 17.16 per litre as compared to Rs 15.66 at present. Basic excise duty on unbranded or normal petrol has been increased from Rs 8.48 per litre to Rs 9.48 and the same on unbranded diesel from Rs 9.83 to Rs 11.33. The basic excise duty on branded petrol has been raised from Rs 9.66 per litre to Rs 10.66 and the same on branded diesel from Rs 12.19 to Rs 13.69 per litre.

The three hikes in excise duty in January take to five the number of times tax rates on the two fuel have been raised this fiscal. If the government would not have raised these duties, consumer price of petrol and diesel should have been lower by 11.77 a litre and Rs 13.30 per litre, respectively. In excise collections from the petroleum sector in 2014-15, the government had collected Rs 99,184 crore, which stood at Rs 33,042 crore in the first quarter of the current fiscal.

Prior to this, the government had on January 16 hiked the excise duty on petrol by Rs 0.75 per litre and Rs 2 on diesel to mop up over Rs 3,700 crore in additional revenue. Before that the government on January 2 had hiked the excise duty on petrol by Rs 0.37 per litre and Rs 2 on diesel to mop up a little less than Rs 4,400 crore.

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