Govt raises excise duty on petrol, diesel

The government on Thursday raised excise duty on petrol and diesel by Rs 1.50 a litre but the common man will be shielded against the hike as the oil companies have absorbed the increase for now.

India’s largest fuel retailer Indian Oil Corp (IOC) said the excise duty hike will not be passed on to consumers and will be adjusted against reduction in rates that was likely by this weekend.

The levy, however, is expected to shore up government revenues by Rs 13,000 crore on an annual basis. Besides, it will also act as a fund buffer in case crude prices spike in future.

Excise duty on normal or unbranded petrol was hiked from Rs 1.20 per litre to Rs 2.70 per litre and unbranded diesel from Rs 1.46 a litre to Rs 2.96, a government notification said.
The duty on branded petrol was raised from Rs 2.35 a litre to Rs 3.85 and on branded diesel from Rs 3.75 to Rs 5.25 per litre, the notification said.

“There is no increase in retail prices,” IOC Chairman B Ashok said. “For the moment, we are not passing on the increase in excise duty. It is being absorbed by companies and will be adjusted against review in rates which is due on Saturday,” he said.

Before the duty hike, petrol cost Rs 64.25 a litre in Delhi and diesel Rs 53.35 a litre. They will continue to be priced at the same rate.

Unbranded petrol at present attracts a basic excise duty of Rs 1.20 per litre, a special additional excise duty of Rs 6 a litre and a road cess of Rs 2 per litre.

Unbranded diesel attracts a basic excise duty of Rs 1.46 a litre and road cess of Rs 2 per litre.The total excise duty on unbranded petrol will rise from Rs 9.20 to Rs 10.70 per litre and that on unbranded diesel from Rs 3.46 to Rs 4.96 per litre.

In the past one year, petrol prices have come down by Rs 12 per litre and in the past one month diesel has lost Rs 5 a litre.

Sources said that a further downward revision owing to softening of global crude prices will make it difficult for the government to reverse the same when crude prices harden.