With Finance Bill passed, govt can increase petrol, diesel prices


New Delhi, Mar 24 (IANS): The prices of petrol and diesel can increase further as Parliament on Monday passed Finance Bill to allow the government to increase special additional excise duty by Rs 18 and Rs 12 respectively.

This compares to present limit of Rs 10 and Rs 4 for petrol and diesel respectively.

The government had increased excise duty on petrol and diesel by Rs 3 per litre after a crash in oil prices in global markets.

With the passage of the Finance Bill 2020, the government has got another mandate to increase the duty further.

In amendments introduced in the Finance Bill 2020, the Finance Ministry has proposed to raise special additional excise duty on petrol to Rs 18 per litre from present Rs 10 per litre and on diesel to Rs 12 per litre from the present Rs 4 per litre. The said changes have been made by amending the eighth schedule of the Finance Act 2002.

It is not clear whether the entire Rs 8 per litre increase in special additional excise duty would be used as cap to raise duties upto that level or the government would notify the entire increase at one go.

If this happens, the retail price of petrol and diesel could shoot up by Rs 5-6 per litre as the remaining amount may be absorbed by public sector oil marketing companies who have been daily reducing the price of two petroleum products in line with global fall of oil prices.

Sources said that a notification with changes in duty structure on petrol and diesel may come later.

But for the government, a Rs 8 per litre tax would be a bonanza that would increase its annual excise collections from the sector by a whopping Rs 1,20,000 crore. This, govermment officials feel, along with savings of over $ 15-20 billion in oil import bill in FY21, will provide enough room to bring the economy back on track after Covid-19 fight.

Along with increase in cap/threshold on special additional excise duty, a new ceiling has also been fixed for additional excise duty (road and infrastructure cess) levied on petrol and diesel. This has also been raised by Rs 8 per litre on the two products to Rs 18 per litre.

But any resultant increase in retail price of the two products could have a negative impact on the economy, which is already facing a slowdown. Price rise of auto fuels could have a multiplier effect, raising prices of several essential products and services and pushing up inflation.

In February, the consumer price inflation has fallen to 6.58 per cent but this could begin to rise again if petrol and diesel prices are raised.

On March 14, the government had raised excise duty on petrol and diesel by Rs 3 per litre, the highest in the five years, taking advantage of the low global oil prices to boost its coffers. Through this increase, the centre, could gain in excess of Rs 45,000 crore of revenue for the full year.

The increase of Rs 8 per litre in excise duty will be the highest in the two tenures of the NDA government. It will follow the Rs 3 per litre increase in duty on March 14, and another Rs 2 per litre increase in excise/cess proposed in 2019 Union Budget. Before these increases, petrol and diesel price went for a series of nine hikes in quick succession between 2015 and 2016. There were, however, cuts of Rs 2 per litre twice on both petrol and diesel in October 2017 and again in October 2018.

At present, the total central excise duty on petrol stands at Rs 22.98 per litre and on diesel, at Rs 18.83 per litre. With Rs 8 per litre increase these would increase substantially to Rs 30.98 per litre on petrol and Rs 26.83 on diesel. In addition, states also levy VAT on the two products. Petrol and diesel has not been so far included under the GST.

 

  

Comment on this article

  • Omska Ticket, India

    Wed, Mar 25 2020

    Mr Modi is doing so much for our country even a 50% hike on excise shouldn't be frowned...My best wishes to Modiji a great visionary and a clean leader

    DisAgree Agree [1] Reply Report Abuse

  • Prakash Lewis, Matpady, Brahmavar/ Dubai

    Tue, Mar 24 2020

    Crude oil prices reduced more than 50%. At the current suitivation where people cannot use public transport to control spread corona virus government should reduced petrol and desiel price.
    Increasing prices is not a good solution.

    DisAgree [1] Agree [6] Reply Report Abuse

  • chris, Mangalore

    Tue, Mar 24 2020

    As per present oil price the petrol price should be less than 40 rupees and diesel must be less than 30 rupees. Per liter As the oil price is coming down internationally and this Govt is just looting us ,People are worried about their jobs no support from Govt and all. Our Govt is only killing people more then corna virus as if the petroleum price comes up indirectly all will come up

    DisAgree [1] Agree [9] Reply Report Abuse

  • Dylan, Mangalore

    Tue, Mar 24 2020

    The Government only fooling people by charging a high price on petrol and diesel when crude prices are even below USD 30/ barrel. God save us.

    DisAgree [3] Agree [10] Reply Report Abuse

  • Eric Coelho, Mangalore

    Tue, Mar 24 2020

    The best way, stop taking out your cars/bikes, go walking to work place or use public transport. This will cut down consumption of petrol/diesel by 50% and will cause huge damage to revenue for the govt.

    DisAgree Agree [13] Reply Report Abuse

  • D D'SOUZA, M'lore/Dubai

    Tue, Mar 24 2020

    now Its time to ask governament where you will spend the tax money ) and vision for not just 20 years rather then just 5 years term.... where you want to reach the target specially in education and health.. we don't want to spend our tax amount on statue, church/temple or mosque.
    if governament want to build statue,church -temple-mosque let them build from their own political party fund to please the vote. now when virus affect media not showing which religion or his name ? why?
    only showing numbers ... why ? its because it will not benefit for them or any party in vote ... people should wake up, and in future vote for right party who have clear vision for next 20 years for out next generation

    DisAgree [1] Agree [5] Reply Report Abuse

  • Shane, Mng

    Tue, Mar 24 2020

    Broad day light heist from modi

    DisAgree [4] Agree [8] Reply Report Abuse

  • VISHUKIRAN FERNANDES, Kalasa

    Tue, Mar 24 2020

    Nothing is cheap these days

    DisAgree [1] Agree [9] Reply Report Abuse

  • mohan, Mangalore

    Tue, Mar 24 2020

    This is ridiculous... As per present oil price the petrol price should be less than 40 rupies and disel must be less than 30 rupees. Per litter..... but government selling it 74 rupees. Per litter ..... .. . So how much profit government taking..... it is more than 1000 times .. this government is only looting people and public us kept quite..... very very big burden on public.....

    DisAgree [1] Agree [29] Reply Report Abuse

  • zakir, B'lore

    Tue, Mar 24 2020

    Effect of horse trading....................

    DisAgree [1] Agree [13] Reply Report Abuse

  • GURKA, Mangaluru

    Tue, Mar 24 2020

    This is nothing but dictatorship TO control and hide the mistakes of GOVT by raising the prices to cover up the financial crisis ! why they cant reduce the perks and previlages of MP and MLA instead increasing year by year ! Why they need pensions ! after accumulating crores of money in their accounts within a span of 5 years !!

    DisAgree Agree [49] Reply Report Abuse

  • Indian, India

    Tue, Mar 24 2020

    Keep it 70 range use rest tax for free food medicine in this critical stage

    DisAgree [2] Agree [15] Reply Report Abuse

  • Rajesh, Murudeshwar

    Tue, Mar 24 2020

    Waah Modi'ji waah

    DisAgree Agree [31] Reply Report Abuse

  • Ramnath Kamath, Mangaluru

    Tue, Mar 24 2020

    We must support the initiatives of Modiji as he is doing all this in the interest of the nation. When he is sacrificing everything for the nation and for us we are duty bound to repay his debts. Let us pay more for fuel in the interest of the nation with our dear leader Modiji in mind.

    DisAgree [73] Agree [3] Reply Report Abuse

  • Sadik, Ullal/Ajman

    Tue, Mar 24 2020

    Andh Bhakt, jaago jaago.

    DisAgree [3] Agree [20] Reply Report Abuse

  • kumara, abu dhabi

    Tue, Mar 24 2020

    cut down consumption, the govt. will be forced to reduce the prices,

    DisAgree [2] Agree [4] Reply Report Abuse


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