Excise duty collections from petrol and diesel recorded over 34 per cent growth in the April-August period. But any decision on lowering duties on these fuels depends on whether the government wants to curtail fiscal deficit or extend relief to the masses.

Crude prices hit $80/barrel

Meanwhile, with crude prices hitting $80 a barrel on Tuesday for the first time in three years, domestic oil marketing companies raised diesel prices for the third straight day and for petrol after the July 17 hike.

Per a senior government official, Central excise duty collections from petrol and diesel surged to ₹1.72-lakh crore in April-August from ₹1.28-lakh crore during the same period last fiscal. Overall, indirect tax collections (Central excise, customs duty, Centre’s share in GST) in April-August went up by over 41 per cent to ₹5.19-lakh crore, up over 28 per cent compared with same period in FY20. On whether this buoyancy in collections will provide relief for consumers from the high fuel prices, the official ruled out any such move for now. “Going by the trend of prices in the international market, even if we were to cut rates by ₹5, people would still not be satisfied ,” he said, adding that even States are not in a position to lower the levy. It may be noted that the Centre collects duty at a fixed rate while States have a mix of fixed and ad valorem (percentage of value).

Experts say any decision to lower the duty needs a different approach. Sunil Kumar Sinha, Principal Economist with India Ratings & Research, said there was buoyancy not just in indirect taxes but in direct taxes too. “Now, in such a situation, policymakers will have to choose between managing fiscal deficit and lessening the burden on people. It is a big policy issue for the governments,” he said, hoping the revenue collection (tax and non tax-revenue) this year exceeds budget estimate.

Oil marketing companies on Tuesday raised the prices of petrol and diesel by 20 paise/litre and 25 paise/litre, respectively. Petrol now costs ₹101.39/litre and diesel ₹89.57/ litre in Delhi.

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