Govt amends law to levy higher excise duty on petrol, diesel

To cash in on the falling global crude oil prices, the Centre on Monday amended a law that enables it to raise the cap on special excise duty on petrol and diesel in future.

The amendment made in the Finance Bill was passed by Parliament on Monday through which the excise duty on petrol could be hiked to Rs 18 per litre from the current Rs 10 in future.

Similarly, the duty on diesel could go up to Rs 12 per litre from the existing Rs 4 a litre.

The amendments were moved by Finance Minister Nirmala Sitharaman as part of the Finance Bill that seals with the taxation proposal of the Centre.

Earlier, the cap on special additional excise duty on petrol was Rs 10 per litre and on diesel, it was Rs 4 per litre.

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The government had on March 14 raised excise duty on petrol and diesel by Rs 3 per litre each to raise an additional Rs 39,000 crore in revenue annually. This duty hike included Rs 2 a litre increase in special additional excise duty and Re 1 in road and infrastructure cess.

This hike took the special additional excise duty to maximum permissible in law -- Rs 10 in case of petrol and Rs 4 in case of diesel.

Now, through an amendment of the Eighth Schedule of the Finance Act, this limit has been increased to Rs 18 per litre in case of petrol and Rs 12 in case of diesel.

This is an enabling provision and no change in excise duty is being done as of now, an official said.

The amendment gives powers to the government to raise the duty by up to Rs 8 per litre in petrol and diesel at any time it wishes.