No Change in Retail Price :Excise duty on petrol, diesel hiked

Highlights: 

  • The government recently raised excise duty on petrol and diesel by Rs 2 per litre each but retail pump rates will not be increased.
  • The third excise duty hike since November will help raise additional Rs 6,000 crore during remaining three months of the current fiscal as the government took advantage of a slump in global oil prices to five-year low to shore up revenue without stoking inflation.
  • The oil firms had skipped cutting rates of the two fuels that had become necessary as international oil rates plunged to their lowest level since May 2009.
  • The excise duty hike has now been set off against the reduction in rates that was due because of slide in oil prices.
  • The slump in global oil rates had warranted a price cut of Rs 3.22 per litre in petrol and about Rs 3 in diesel and even after adjusting the excise increase; oil firms will have a neat margin of over Re 1 per litre.
  • Together with Rs 1.50 a litre excise duty hike effected on both products from 12th November and Rs 2.25 per litre increase in duty on petrol and Re 1 on diesel from 2nd December, the government will mop up about Rs 17,000 crore this fiscal to contain fiscal deficit.
  • Excise duty on normal or unbranded petrol has been hiked from Rs 4.95 per litre to Rs 6.95 a litre and on unbranded diesel from Rs 3.96 to Rs 5.96 a litre.
  • The total incidence of excise on petrol, after including special excise duty and road cess, will be Rs 14.95 and that on diesel will be Rs 7.96 a litre.
  • Similarly, excise duty on branded petrol has been raised from Rs 6.10 to Rs 8.10 a litre and on branded diesel from Rs 6.25 to Rs 8.25 per litre.
  • These increased rates of basic excise duty will be effective from January 2, 2015 (that is from midnight of 1st and 2nd January, 2015).