Govt can cut excise duty on petrol, diesel by Rs 8.5/litre without hurting revenues, say analysts


PTI, Mar 3, 2021, 5:46 PM IST

Credit: iStock Photo

New Delhi: The government has room to cut excise duty on petrol and diesel by up to Rs 8.5 per litre without impacting its target for revenue from the tax on the two fuels, analysts said.

There have been calls by opposition parties as well as sections of society to the government to reduce excise duty to ease consumer pain.

“We estimate excise duty on auto fuels in FY22 (April 2021 to March 2022), if it is not cut, at Rs 4.35 lakh crore versus budget estimate of Rs 3.2 lakh crore.

“Thus, even if excise duty is cut by Rs 8.5 per litre on or before April 1, 2021, FY22E budget estimate can be met,” ICICI Securities said in a note.

It expressed optimism for an excise duty cut given demand recovery, impending privatisation and inflation concerns but expected it to be more modest than Rs 8.5 a litre.

Excise duty was raised by Rs 13 and Rs 16 per litre on petrol and diesel between March 2020 and May 2020, and now stands at Rs 31.8 on diesel and Rs 32.9 per litre on petrol.

The increase in excise duty was to mop up gains arising from international crude oil prices falling to a two-decade low.

But, with oil prices recovering, it has not yet restored the taxes to their original levels.

“If the cut is more modest, which we expect, FY22 excise duty will be higher than the budget estimate,” ICICI Securities said.

Central and state taxes make up for 60 per cent of the retail selling price of petrol and over 54 per cent of diesel.

Petrol is priced at Rs 91.17 per litre in Delhi and diesel comes for Rs 81.47.

The rates of regular petrol had last month crossed the Rs 100-mark at a few places in Rajasthan and Madhya Pradesh, which levy the highest value-added tax (VAT) on the fuel in the country.

Between November 2014 and January 2016, the government had raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.

In all, duty on petrol rate was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped the government’s excise mop-up more than double to Rs 2,42,000 crore in 2016-17, from Rs 99,000 crore in 2014-15.

The government had cut excise duty by Rs 2 in October 2017, and by Rs 1.50 a year later. But, it raised excise duty by Rs 2 per litre in July 2019. It again raised excise duty on March 2020, by Rs 3 per litre each. In May that year, the government hiked excise duty on petrol by Rs 10 per litre and that on diesel by Rs 13 a litre.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

Jayant Patil claims BJP used irrigation ‘scam’ to blackmail Ajit Pawar; Fadnavis, NCP chief hit back

Medical College expels 5 MBBS students from hostel for ragging juniors

Insulting women is in DNA of Cong leaders, alleges Jharkhand BJP

Man arrested from Delhi for calling up Pappu Yadav posing as aide of Lawrence Bishnoi

Tejasvi Surya hits out at Kharge, CMs of Cong-ruled states over poll promises

Farooq Abdullah seeks inquiry into spike in terror attacks in Valley since Omar’s swearing-in

Sabarimala pilgrims to get free insurance coverage of Rs five lakh

Related Articles More

Sensex, Nifty decline on selling in IT shares, FII sellout; end Samvat 2080 with 22% gains

Sensex, Nifty decline in early trade on unabated foreign fund outflows, selling in IT stocks

Gold surges Rs 1,000 to breach Rs 82k-mark as Diwali sparkles demand

Car makers witness record sales on Dhanteras; Oct bookings up by 30%

Dhanteras begins on slow note; Jewellers expect footfalls to increase

MUST WATCH

Gho Pooja in Deepavali Festival

Melukote Deepavali

Ganapathi Co-operative Society Ltd

Udayavani Chinnara Banna 2024

Annapoorna Aahar | Food Places In Mysore


Latest Additions

Jayant Patil claims BJP used irrigation ‘scam’ to blackmail Ajit Pawar; Fadnavis, NCP chief hit back

Medical College expels 5 MBBS students from hostel for ragging juniors

Insulting women is in DNA of Cong leaders, alleges Jharkhand BJP

Man arrested from Delhi for calling up Pappu Yadav posing as aide of Lawrence Bishnoi

Tejasvi Surya hits out at Kharge, CMs of Cong-ruled states over poll promises

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.