Brent crude oil prices for April delivery reached $60 a barrel, the highest in a year supported by economic revival hopes and supply curbs by producer group OPEC and its allies.
Rising crude prices are expected to impact petrol and diesel rates in India, which have now hit a new record high. Continuous increase in petrol and diesel prices may push overall prices of other commodities higher. Despite the Reserve Bank of India nudging the Centre to cut petroleum prices, government officials privy to the development said it is highly unlikely that the Centre will move to cut excise duty or any other taxes as there is no fiscal space.
The government has done it’s Budget math assuming crude prices will remain between $60 and 65 throughout the next year. If it rises sharply, the whole budget math could go wrong.
The Centre’s excise duty on diesel is currently Rs 31.83/per litre, compared with nearly Rs 16 a litre last year. Similarly, its excise levy on petrol is Rs 33 a litre now, compared to Rs 19.98 last year.
Other than that, there is a 2.5% customs duty on unbranded petrol and Rs 2.5 of newly imposed cess. Diesel attracts a cess of Rs 4 per litre.
The latest government data showed while all other tax collections declined due to the pandemic, excise duty, which mainly comes from fuel, rose 40% in the first seven months of the financial year 2020-21 compared to the same period last year.
(Published 08 February 2021, 19:13 IST)
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