The Union government will gain close to Rs 1.6 lakh crore in additional revenues this fiscal from a record hike in excise duty on petrol and diesel that has pushed total incidence of taxation on auto fuels to 70 per cent of the price.
Late on Tuesday evening, thegovernment hiked excise duty on petrol by Rs 10 per litre and that on diesel byRs 13 a litre to mop up gains arising from international oil prices falling toa two-decade low.
Petrol price remainedunchanged at Rs 71.26 a litre and diesel at Rs 69.39 as state-owned oil firmsset off the excise duty hike against gains they accrued from fall ininternational oil rates.
This is the second hike inexcise duty in less than two months and will help the government garner over Rs1.7 lakh crore in additional revenues annually at 2019-20 level of consumption,industry officials said.
Considering the slump inconsumption due to travel restrictions imposed by coronavirus lockdown, thegains in the remaining 11 months of the current fiscal year (April 2020 toMarch 2021) will be close to Rs 1.6 lakh crore, they said.
Together with Rs 39,000crore in annual revenues gained from the March 14 excise duty hike of Rs 3 perlitre each on petrol and diesel, the government stands to gain as much as Rs 2lakh crore.
After the excise duty hike,taxes – both central excise and state VAT) – make up for 70 per cent of theprice of petrol and diesel. A litre of petrol costs only Rs 18.28 per litre inDelhi but after including excise duty (Rs 32.98), dealer commission (Rs 3.56)and VAT (Rs 16.44) the price for consumer comes to Rs 71.26 a litre.
Similarly, a litre of dieselcosts only Rs 18.78 but after including excise duty (Rs 31.83), dealercommission (Rs 2.52) and VAT (Rs 16.26), it is priced at Rs 69.39 for consumers.
State-owned fuel retailingcompanies, Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) andHindustan Petroleum Corp Ltd (HPCL) had frozen petrol and diesel prices sinceMarch 16, anticipating the government move and will now set off gains theyaccrued from the continuing drop in international oil prices against the exciseduty hike.