The Centre on Saturday came up with a increase in excise duty on petrol and diesel by a steep Rs 3 per litre each to collect about Rs 39,000 crore additional revenue although there is a slump in international prices. The government repeated its 2014-15 act of not passing on gains to customers after the slash in international market.

Government sources said that while the benefit of reduction of crude prices in the first quarter of this year has significantly gone to the consumer, the Centre has taken this step of increasing duty to raise some revenue in view of a tight fiscal situation. This would help in generating the resources for development of infrastructure and other developmental items of expenditure.

The tax changes will not impact retail prices of petrol and diesel as state-owned oil firms adjusted them against the recent fall in oil prices and the likely trend in the near future, according to officials.

According to a notification issued by the Central Board of Indirect Taxes and Customs, special excise duty on petrol was hiked by Rs 2 to Rs 8 per litre in case of petrol and to Rs 4 a litre from Rs 2 in case of diesel.

While the road cess was raised to Rs 10 by Rs 1 per litre each on petrol and diesel.

The overall incidence of excise duty on petrol has risen to Rs 22.98 per litre and that on diesel to Rs 18.83.

In 2014 when PM Modi led government came to power the tax on petrol was Rs 9.48 per litre and that on diesel was Rs 3.56 a litre.

Officials said the increase in excise duty will result in annual increase of government revenues by about Rs 39,000 crore. The gains during the remaining three weeks of the current fiscal would be less than Rs 2,000 crore.

Changed on a daily basis, petrol and diesel prices were cut by 13 paise and 16 paise respectively as oil companies adjusted the excise duty hike against the  the oil prices plunging after Saudi Arabia made deep price cuts following a failure by OPEC and its allies to strike a deal to support energy markets.

Global oil benchmark Brent crude futures plunged nearly 30 per cent to USD 32.11 per barrel after top exporter Saudi Arabia launched a price war in response to a failure by leading producers to strike a deal to support energy markets.

Petrol now cost Rs 69.87 a litre in Delhi and a litre of diesel comes for Rs 62.58.

The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.

In all, duty on petrol rate was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped government’s excise mop up more than double to Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.
It cut excise duty by Rs 2 in October 2017 and by Rs 1.50 a year later. But it raised excise duty by Rs 2 per litre in July 2019.

Benchmark crude oil prices have halved since January to USD 32 per barrel. In sync with this, the prices of petrol and diesel have also come down by more than Rs 6 per litre (from Rs 76.01 a litre on January 11, 2020 to Rs 69.87 a litre on March 14 for petrol, and from Rs 69.17 to Rs 62.58 for diesel during the same period.

Global crude prices tanked after Saudi Arabia on Monday cut its price for April delivery by USD 4-6 a barrel to Asia and USD 7 to the United States, with Aramco selling its Arabian Light at an unprecedented USD 10.25 a barrel less than Brent to Europe, reports said.

(With PTI inputs)