Govt hikes excise duty on petrol, diesel

Govt hikes excise duty on petrol, diesel

Govt hikes excise duty on petrol, diesel

In a second successive action in less than six weeks, the government on Wednesday increased excise duty on petrol by Rs 0.30 per litre, and on the diesel by Rs 1.17 a litre, to garner Rs 2,500 crore.

A bulk of this increase will go for infrastructure development and correction in government finances, Finance Minister Arun Jaitley said.

With Wednesday’s hike, the basic excise duty on branded petrol has been increased from Rs 8.24 per litre to Rs 8.54 a litre, and the same on branded diesel from Rs 7.02 to Rs 8.19 per litre.

The Opposition charged the government with “profiteering” from the fall in global oil prices and demanded a rollback. The demand was made on the floor of the Lok Sabha by parties such as AIADMK, BJD and Samajwadi Party.

Jaitley, however, defended the hike in excise duty, saying the road users must pay for its upkeep. He also said that a bulk of 42 per cent excise collected on the two fuels goes to the states. The government has so far raised Rs 3,200 crore from previous excise duty hikes.

Oil companies had on Tuesday cut petrol prices by a meagre 50 paise a litre. In spite of multiple price cuts, petrol and diesel prices have remained relatively high because of a series of excise duty hikes imposed by the government.

 “Part of the fuel cost is going to developmental activities, particularly to national highways and rural roads, because those who consume petrol and diesel drive vehicles on these roads, and must pay for it,” the finance minister said in Rajya Sabha.

A substantial part of petrol and diesel costs is on account of the value added tax, which goes to states, while the fourth part goes to oil companies that suffer huge losses on purchase of crude from global markets, he said.

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