Comments
Central excise duty collections seem to have saved government finances during the first eight months of the current fiscal. Earnings through central excise duty registered over 47 per cent growth during this period.
A major part of this revenue comes by way of petrol and diesel, where the Centre levies excise duty at a specific rate. Data from the Controller General of Accounts shows that collection from central excise during the April-November period of FY2020-21 was more than ₹1.96 lakh crore as against over ₹1.32 lakh crore during the corresponding period of FY2019-20.
Post implementation of GST (July 1, 2017), central excise covers mainly five petroleum products: crude oil, petrol, diesel, aviation turbine fuel and compressed natural gas.
While basic excise duty on crude is not so significant, it is ad valorem (a certain percentage of value) on ATF at 11 per cent and on natural gas-compressed 14 per cent. In case of an ad valorem system, earnings happen only if the product price goes up.
Petrol and diesel attract central excise duty through a specific rate mechanism. As of now, ₹32.98 a litre is total excise duty on petrol and ₹31.83 a litre on diesel. Here, excise duty comprises basic excise duty, special additional excise duty and additional excise duty, which is also known as Road and Infrastructure Cess. In case of specific mechanism, the Centre does not get additional revenue.
Petrol consumption
According to Sunil Kumar Sinha, Principal Economist with India Ratings & Research, one of the reasons is upward revision of central excise duty on petrol and diesel in May 2020 even when international prices were low — the excise duties were raised by ₹10 per litre on petrol and ₹13 per litre on diesel. “Even when consumption is down, collection will go up,” he said.
Data from the Petroleum Planning and Analysis Cell (PPAC) shows that consumption of diesel is up on a sequential basis but down from last year. However, consumption of petrol has gone up on a sequential as well as yearly basis. As the number of flights operating is still low, ATF consumption is very low.
Now, with a spike in auto fuel prices, the demand to introduce GST for petrol and diesel has resurfaced. However, Sinha does not think that will happen soon. “First, elasticity is high for both the products and second, considering friction and mistrust between the Centre and State on GST compensation cess, States will not agree soon,” he said.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.