The Center said in an official release that excise duty on petrol has been cut by Rs 5 and on diesel by Rs 10.
As a result, petrol and diesel are set to become cheaper. The reduced prices will be applicable from November 4.
“Shortage excise duty on diesel will be double that of petrol and will come as an incentive to the farmers during the upcoming Rabi season,” the government said.
States have also been urged to reduce Value Added Tax (VAT) on petrol and diesel to provide relief to consumers.
biggest ever decrease
This is the highest ever reduction in excise duty and a rollback of a part of the increase of Rs 13 and Rs 16 per liter in taxes already applicable on petrol and diesel.
The Center had raised excise duty on petrol by Rs 13 per liter and on diesel by Rs 16 between March-May 2020, when oil prices crashed due to the pandemic. The states also followed suit with the consequent increase in VAT.
In the amendment, the excise duty on petrol was increased by 65 per cent from Rs 19.98 to Rs 32.98 per liter and on diesel by 79 per cent from Rs 15.83 to Rs 28.35.
Petrol, diesel prices hit record high in most states
Fuel prices have hit record highs for the past few months.
Petrol prices have increased in 28 out of the last 36 days, its pump price is Rs 8.85 per litre.
In Delhi, a liter of petrol costs Rs 110.04, while diesel costs Rs 98.42 per litre.
Similarly, petrol costs Rs 115.85 per liter, while diesel costs Rs 106.62 per liter in Mumbai, which is the highest among all metros.
Rising petrol and diesel prices as a result of the global jump in crude oil prices were creating inflationary pressures on the economy.
“The Government of India has made efforts to ensure that there is no shortage of energy in the country and commodities like petrol and diesel are sufficiently available to meet our needs,” the government said.
It believes that reduction in excise duty on petrol and diesel will increase consumption and keep inflation low, helping the poor and middle class population.
‘Excise duty cut will cost Rs 1 lakh crore in revenue’
The reduction in excise duty will result in loss of revenue of Rs 8,700 crore per month to the government. This sums up an annual impact of over Rs 1 lakh crore, news agency PTI quoted industry sources as saying.
For the remainder of the current financial year, the impact would be Rs 43,500 crore.
Before the cut, the government’s collection from the levy of excise duty on petroleum products had increased by 33 per cent in the first six months of the current financial year over the previous year and was 79 per cent higher than pre-Covid levels.
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