Petrol, diesel prices to remain same after excise duty cut: Know why

Jon Howard
February 2, 2018

Last week, the spurt in rates, caused by the rally in global oil prices, has led to the oil ministry asking the finance ministry for a cut in excise duty in the Union Budget 2018-19, to be presented in Parliament next week. The excise duty on branded petrol has been reduced from Rs 7.66 to Rs 5.66 and branded diesel has been reduced from Rs 10.69 to Rs 8.69 per liter. On the other hand, the incumbent crude oil price is hovering around $71 per barrel mark, which has resulted in the rise of domestic petrol rate to as high as Rs 80.77 in Mumbai region. The Narendra Modi government also made a decision to do away with an additional excise duty on fuel by Rs 6. Unbranded diesel having basic excise duty of Rs 8.33 per litre was reduced to Rs 6.33 per litre.

Finance Secretary Hasmukh Adhia said that even though excise duty on petrol and diesel will decrease by 2 rupees, but practically their final value will not have any effect. After moving to daily revision of fuel prices in June past year, the government had cut basic excise duty on petrol and diesel by Rs 2 per litre in October.

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The government has cut excise duty by Rs 2 and it now stands at Rs 4.48 per litre. The excise duty was slashed for both branded and unbranded petrol and diesel. Today, price of petrol went up by 15 paisa per liter and that of diesel by 19 paisa.

The government has excluded petrol and diesel from the ambit of GST (Goods and Service Tax). The move was expected to lessen the impact of rising petrol and diesel prices on a vast consumer base. Under the new tax regime, the maximum tax imposed on petrol and diesel will be capped at 28 per cent. Only the devolution of cess has been changed, he said. The government, however, may choose to levy an additional cess on diesel and petrol.

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