Excise duty on petrol, diesel up by Rs 3 per litre as oil prices decline

March 14: The government has raised excise duty on petrol and diesel by ₹3 each to boost revenue collections taking advantage of the declining global crude oil price. Following the changes, excise duty on petrol has gone up to ₹22.98 from ₹19.98 and that on diesel to ₹18.83 from ₹15.83. This is in addition to the value added tax that states levy on auto fuel.

Special additional excise duty on petrol was hiked by Rs 2 to Rs 10 per litre, while the levy on diesel was doubled to Rs 4 per litre, the finance ministry said in a notification dated March 13. The increase in excise duty would in normal course result in a hike in petrol and diesel prices but most of it would be adjusted against the fall in rates that would have necessitated because of the slump in international oil prices.

For state-owned oil marketing companies like Indian Oil Corp Ltd, which at times come under pressure from government to give price relief to consumers by taking a hit on their financial health, the low oil price regime offers a chance to recover some of those losses by not passing on the benefit of oil price fall entirely to consumers.