Budget 2019: Govt increases excise duty, cess on petrol, diesel by Rs 2

The government has decided to increase excise duty and cess each on petrol and diesel by Re 1 per litre. With this, fuel prices across the country will rise by a significant margin. Finance Minister Nirmala Sitharaman made the announcement in the Budget speech today. Petroleum products, being cash cows for the exchequer, fetch huge revenue, and an increase in excise duty will hurt consumers. Petrol was priced at Rs 70.51 in Delhi and Rs 76.15 per litre in Mumbai on July 4, while diesel was priced at Rs 64.33 per litre in Delhi and Rs 67.96 per litre in Mumbai.

"Crude prices have softened from their highs. This gives me a room to review excise duty and cess on petrol and diesel. I propose to increase Special Additional Excise duty and Road and Infrastructure Cess each by one rupee a litre on petrol and diesel," Sitharaman said in her Budget speech.

Right now, petrol attracts excise duty of Rs 17.98 per litre, while VAT levied on petrol amounts to Rs 14.98. The overall price charged from dealers amounts to Rs 32.96 per litre. In the case of diesel, the government charges Rs 13.83 per litre excise duty and Rs 9.47 per litre VAT. The price charged to dealers amounts to Rs 23.3 per litre.

It has been a common practice in the past to cut duties when global crude prices increased. However, since 2014, the government has been found increasing excise duty even as global prices fell, leading to an increase in the central government's revenue.

According to the Ministry of Finance's revenue collection estimates, the Centre collected over Rs 2.579-lakh crore by levying taxes on the petroleum products in FY19. This is a massive jump from the gross revenue collection of around Rs 88,600 crore in 2013/14. In FY18, the collection was Rs 2.016-lakh crore.

Edited by Manoj Sharma

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