JOIN USUnion Budget 2021 | Will the agri cess burn a hole in the consumer's pocket?
In the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman tweaked excise duty structure to accommodate an Agriculture Infrastructure and Development Cess (AIDC), on petrol and diesel.
The Centre, as proposed by FM Sitharaman in her third Union Budget presentation, imposed a Rs 2.5 per litre agri cess on petrol and Rs 4 a litre on diesel.
"There is an immediate need to improve agricultural infrastructure so that we produce more, while also conserving and processing agricultural output efficiently. This will ensure enhanced remuneration for our farmers. To earmark resources for this purpose, I propose an Agriculture Infrastructure and Development Cess (AIDC) on a small number of items," said Sitharaman.
"However, while applying this cess, we have taken care not to put additional burden on consumers on most items," the minister added.
The most important question now is - Will the agri cess burn a hole in the consumer's pocket?
Fortunately, the agri cess will not develop as an additional burden on consumers, fundamentally because as this was offset by an equivalent reduction in excise duty.
At present, for petrol, three charges are imposed - a Basic Excise Duty (BED) of Rs 2.98 per litre is levied, a Special Additional Excise Duty (SAED) of Rs 12 a litre and Rs 18 as road and infrastructure cess.
Now, in order to accommodate the proposed agri cess, the BED was cut to Rs 1.4 and SAED to Rs 11.
Similarly, on diesel, BED was cut from Rs 4.83 to Rs 1.8 a litre and SAED to Rs 8 from Rs 9 per litre.
The government had last year hiked excise duty by Rs 13 and Rs 16 per litre to mop up benefits arising from falling international oil prices. It hasn't cut the duty now that oil prices have risen, resulting in fuel prices climbing to record highs.
Petrol is priced at Rs 86.30 per litre in Delhi and diesel for Rs 76.48.