Economy

Petrol price hiked by ₹2.45, diesel by ₹2.36 following tax hike in Budget

PTI New Delhi | Updated on July 06, 2019

Finance Minister Nirmala Sitharaman raised taxes on the fuels to part-fund her Budget for 2019-20.   -  The Hindu

Rates vary from state to state depending upon the incidence of local sales tax or VAT

Petrol price was on Saturday hiked by a minimum ₹2.40 per litre and diesel by ₹2.36 after Finance Minister Nirmala Sitharaman raised taxes on the fuels to part-fund her Budget for 2019-20.

Petrol price in Delhi was increased by ₹2.45 per litre to ₹72.96 while the increase in Mumbai was ₹2.42 to ₹78.57, according to a price notification issued by state-owned Indian Oil Corp (IOC). In Kolkata, petrol price went up by ₹ 2.40 to ₹75.15 and in Chennai by ₹2.57 to ₹75.76 a litre. Diesel price was hiked by ₹2.36 per litre in Delhi to ₹ 66.69 and by ₹ 2.50 per litre in Mumbai to ₹ 69.60.

Rates vary from state to state depending upon the incidence of local sales tax or VAT. Also prices vary by a few paise at pumps operated by other state-owned fuel retailers, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL).

Sitharaman had on Friday raised excise duty and road and infrastructure cess on petrol and diesel by ₹ 2 per litre each to raise ₹ 24,000-28,000 crore on an annual basis. Post considering local sales tax or value-added tax (VAT), which is charged after adding central excise duty on base price, the increase in pump rates was higher.

“Crude prices have softened from their highs. This gives me a room to review excise duty and cess on petrol and diesel. I propose to increase Special Additional Excise duty and Road and Infrastructure Cess each by ₹ two a litre on petrol and diesel,” she said in her budget speech.

Before the tax increase, petrol attracted total excise duty of ₹ 17.98 per litre (₹ 2.98 basic excise duty, ₹ 7 special additional excise duty and ₹ 8 road and infrastructure cess). Now, this tax has gone up to ₹ 19.98 a litre. On diesel, a total of ₹ 13.83 per litre excise duty was charged (₹ 4.83 basic excise duty, ₹ 1 special additional excise duty and ₹ 8 road and infrastructure cess). Now, ₹ 15.83 per litre is charged as excise duty.

On top of these, VAT is charged which varies from state to state. In Delhi, VAT is levied at the rate of 27 per cent on petrol and 16.75 per cent on diesel. In Mumbai, VAT on petrol is 26 per cent plus ₹ 7.12 a litre additional tax while diesel attracts 24 per cent sales tax.

Since the Modi government came into power in 2014, excise duty on petrol and diesel has been cut only twice but raised on ten occasions (including the one on Friday). The last time, the duty was revised in October 2018 when excise duty was lowered by ₹ 1.50 a litre each on petrol and diesel. The government had in October 2017 also cut the same by ₹ 2 a litre.

The BJP-government at the centre had raised excise duty on petrol by ₹ 11.77 a litre and that on diesel by ₹ 13.47 a litre in nine instalments between November 2014 and January 2016 to shore up finances as global oil prices fell.

Published on July 06, 2019

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