Centre to earn Rs 2.25 lakh cr more from new petrol, diesel taxes

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Centre will earn an additional Rs 2.25 lakh crore from new taxes on petrol, diesel and other fuels imposed since lockdown began. This is despite global crude prices touching record lows. Experts suggest the government and the oil marketing companies are technically gaining about Rs 730 crore a day because of higher prices for the past month and a half. Bloomberg Intelligence says annual gains for the government would be $30 billion (Rs 2.25 lakh crore). Last fiscal, Centre and state governments’ overall tax collection from the petroleum sector in FY20 stood at Rs 5.5 lakh crore, the Petroleum Planning & Analysis Cell data suggests.

The additional levies are expected to help Centre tide over economic loss due to coronavirus lockdown, which has squeezed its income from taxes amid higher spending on welfare programmes for poor and migrants. Centre has increased excise duty by Rs 13 per litre on diesel and Rs 10 per litre on petrol in May, which catapulted India as the country with the highest taxes (around 69 percent) on fuel, placing it among the countries like France, Germany, Italy and Britain. The government also increased road cess on fuel by Rs 8 per litre.

State governments have also increased their value added taxes on fuel to make up for revenue loss amid the COVID-19 crisis. States like Delhi, Andhra, Assam and West Bengal reported over 90 percent fall in revenue due to the coronavirus lockdown. The increase in duty had simply subsumed the headroom left by a major fall in crude oil prices in April.

Sample this: The Indian basket of crude oil price has crashed over 64 percent this year from $65.5 per barrel in December 2019 to a low of $19.9 per barrel in April. Retail prices, however, did not come down commensurate to this decrease, remained steady and even started rising after June 7. In all, the government charges Rs 32.98 per litre excise duty on petrol and Rs 31.83 per litre on diesel. As per the latest fuel price data, petrol costs Rs 80.43 per litre in Delhi and while diesel costs Rs 81.05 per litre in the national capital.

Initially, there was no impact of the excise duty hike on total fuel prices but the rates started rising after the fourth phase of lockdown. The government increased fuel prices continuously from June 7 till June 29, and experts believe the trend will remain the same throughout the year. So far, diesel rates have been hiked for 22 days, petrol price has been raised on 21 occasions since June 7. The cumulative increase since the oil companies started the cycle on June 7 now totals to Rs 9.17 for petrol and Rs 11.14 for diesel. During the period, and for the first time in India’s history, diesel became costlier than petrol in the national capital.

Read More at: https://www.businesstoday.in/current/economy-politics/centre-to-earn-rs-225-lakh-cr-more-from-new-petrol-diesel-taxes/story/409846.html