The government's collection from levy of excise duty on petroleum products has risen 33 % in the first six months of the current fiscal when compared with last year and is 79 % more than pre-Covid levels, official data showed. Data available from the Controller General of Accounts (CGA) in the Union Ministry of Finance showed excise duty collections during April-September 2021 surging to over Rs 1.71 lakh crore, from Rs 1.28 lakh crore mop-up in the same period of the previous fiscal.
Thanks to a steep hike in excise duty rates, the collection is 79 % more than Rs 95,930 crore mop-up in April-September 2019.
In the full 2020-21 fiscal, excise collections were Rs 3.89 lakh crore and in 2019-20, it was Rs 2.39 lakh crore, CGA data showed.
After the introduction of the Goods and Services Tax (GST) regime, excise duty is levied only on petrol, diesel, ATF and natural gas. Barring these products, all other goods and services are under the GST regime.
Out of the Rs 2.3 lakh crore excise collection in 2018-19, Rs 35,874 crore was devolved to states, according to the CGA. In the previous 2017-18 fiscal, Rs 71,759 crore was devolution to the states out of a collection of Rs 2.58 lakh crore.
The incremental collection of Rs 42,931 crore in the first six months of the fiscal year 2021-22 (April 2021 to March 2022) is four times the Rs 10,000 crore liability that the government has in the full year towards repayment of oil bonds that were issued by the previous Congress-led UPA government to subsidise fuel.
The bulk of excise duty collection is from the levy on petrol and diesel and with sales picking up with a rebounding economy, the incremental collections in the current year may be over Rs 1 lakh crore when compared with the previous year, industry sources said.
In all, the UPA government had issued Rs 1.34 lakh crore worth of bonds (equivalent to a sovereign commitment to pay in future) to state-owned oil companies to compensate them for selling fuel such as cooking gas LPG, kerosene and diesel at rates below cost.
Of this, Rs 10,000 crore is due to be repaid in the current fiscal, according to the finance ministry.
First, Finance Minister Nirmala Sitharaman and then Oil Minister Hardeep Singh Puri had blamed the oil bonds for limiting fiscal space to give relief to people from fuel prices trading at all-time high levels. The bulk of the excise collections come from petrol and diesel on which the Modi government had levied record taxes last year.
Excise duty on petrol was hiked from Rs 19.98 per litre to Rs 32.9 last year to recoup gain arising from international oil prices plunging to multi-year low as pandemic gulped demand. On diesel, the duty is hiked to Rs 31.80.
While international prices have since recovered to USD 85 and demand returned, excise duty has remained at the same level. This has resulted in petrol price soaring above Rs 100-a-litre-mark in all major cities and diesel crossing that level in more than one-and-a-half dozen states.
The total increase in petrol price since the May 5, 2020 decision of the government to raise excise duty to record levels now totals Rs 37.38 per litre. Diesel rates have during this period gone up by Rs 27.98 per litre.
The government had raised excise duty on petrol and diesel to mop up gains that would have otherwise accrued to consumers from international oil prices crashing to as low as USD 19 per barrel.
Petrol and diesel as well as cooking gas and kerosene were sold at subsidised rates during the previous Congress-led UPA government. Instead of paying for the subsidy to bring parity between the artificially suppressed retail selling price and the cost that had soared because of international rates crossing USD 100 per barrel, the then government issued oil bonds totalling Rs 1.34 lakh crore to the state-fuel retailers.
These oil bonds and the interest thereon are being paid now.
Of the Rs 1.34 lakh crore of oil bonds, only Rs 3,500 crore of principal has been paid and the remaining Rs 1.3 lakh crore is due for repayment between this fiscal and 2025-26, according to information made available by the finance ministry.
The government has to repay Rs 10,000 crore this fiscal year (2021-22). Another Rs 31,150 crore is due to be repaid in 2023-24, Rs 52,860.17 crore in the following year and Rs 36,913 crore in 2025-26.
Minister of State for Petroleum and Natural Gas Rameswar Teli had in July told Parliament that the Union government's tax collections on petrol and diesel jumped by 88 % to Rs 3.35 lakh crore in the year to March 31, 2021 (2020-21 fiscal) from Rs 1.78 lakh crore a year back.
Excise collection in pre-pandemic 2018-19 was Rs 2.13 lakh crore.
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today