27/07/2021

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Govt can cut excise duty on petrol, diesel by Rs 8.5 a litre without hurting revenues, Auto News, ET Auto

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In between November 2014 and January 2016, the governing administration experienced raised excise obligation on petrol and diesel on nine occasions to just take absent gains arising from plummeting worldwide oil selling prices.

New Delhi: The governing administration has home to minimize excise obligation on petrol and diesel by up to Rs 8.5 for each litre without having impacting its focus on for revenue from the tax on the two fuels, analysts said.

Petrol and diesel selling prices hover at a historic higher next a relentless maximize in fees more than the previous nine months. There have been calls by opposition parties as properly as sections of modern society to the governing administration to decrease excise obligation to ease buyer agony.

“We estimate excise obligation on car fuels in FY22 (April 2021 to March 2022), if it is not minimize, at Rs four.35 lakh crore compared to price range estimate of Rs 3.2 lakh crore.

“Therefore, even if excise obligation is minimize by Rs 8.5 for each litre on or before April one, 2021, FY22E price range estimate can be satisfied,” ICICI Securities said in a observe.

It expressed optimism for an excise obligation minimize specified need recovery, impending privatisation and inflation problems but predicted it to be much more modest than Rs 8.5 a litre.

Excise obligation was raised by Rs 13 and Rs sixteen for each litre on petrol and diesel amongst March 2020 and May possibly 2020, and now stands at Rs 31.8 on diesel and Rs 32.nine for each litre on petrol.

The maximize in excise obligation was to mop up gains arising from intercontinental crude oil selling prices falling to a two-ten years minimal.

But, with oil selling prices recovering, it has not but restored the taxes to their initial concentrations.

“If the minimize is much more modest, which we count on, FY22 excise obligation will be higher than the price range estimate,” ICICI Securities said.

Central and condition taxes make up for 60 for each cent of the retail selling price of petrol and more than fifty four for each cent of diesel.

Petrol is priced at Rs ninety one.17 for each litre in Delhi and diesel will come for Rs 81.47.

The fees of normal petrol experienced past month crossed the Rs one hundred-mark at a several sites in Rajasthan and Madhya Pradesh, which levy the highest value-extra tax (VAT) on the fuel in the region.

In between November 2014 and January 2016, the governing administration experienced raised excise obligation on petrol and diesel on nine occasions to just take absent gains arising from plummeting worldwide oil selling prices.

In all, obligation on petrol price was hiked by Rs eleven.seventy seven for each litre and that on diesel by 13.47 a litre in these fifteen months that helped the government’s excise mop-up much more than double to Rs 2,42,000 crore in 2016-17, from Rs ninety nine,000 crore in 2014-fifteen.

The governing administration experienced minimize excise obligation by Rs 2 in October 2017, and by Rs one.fifty a 12 months later. But, it raised excise obligation by Rs 2 for each litre in July 2019. It again raised excise obligation on March 2020, by Rs 3 for each litre every. In May possibly that 12 months, the governing administration hiked excise obligation on petrol by Rs ten for each litre and that on diesel by Rs 13 a litre.

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