Petrol price will be hiked by over ₹ 2.5 per litre and diesel by more than ₹ 2.3 after Finance Minister Nirmala Sitharaman Friday raised taxes on the fuels to part-fund her Budget for 2019-20.
Sitharaman raised excise duty and road and infrastructure cess on the auto fuels by ₹ 2 per litre each to raise over ₹ 28,000 crore.
Post considering local sales tax or value added tax (VAT), which is charged after adding central excise duty on base price, the increase in petrol price would be over ₹ 2.5 per litre and that on diesel would be ₹ 2.3.
On Friday, a litre of petrol costs ₹ 70.51 in Delhi and ₹ 76.15 in Mumbai. Diesel is priced at ₹ 64.33 a litre in Delhi and ₹ 67.40 per litre in Mumbai.
Also, the finance minister has levied ₹ 1 per tonne customs or import duty on crude oil. India imports more than 220 million tonnes of crude oil, and the new duty will give the government ₹ 22 crore additionally.
At present, the government does not levy any customs duty on crude oil. Only a ₹ 50 per tonne national calamity contingent duty (NCCD) is charged.
“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.
Petrol currently attracts a total excise duty of ₹ 17.98 per litre (₹ 2.98 basic excise duty, ₹ 7 special additional excise duty and ₹ 8 road and infrastructure cess).
On diesel, a total of ₹ 13.83 per litre excise duty is charged (₹ 4.83 basic excise duty, ₹ 1 special additional excise duty and ₹ 8 road and infrastructure cess).
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.
Import of petrol and diesel attracts customs duty equivalent to the total levy of excise. But the government has, with effect from July 6, removed ₹ 9 a litre import duty equivalent to road and infrastructure cess.
The Modi government had, in its first term, only twice cut excise duty on petrol and diesel but raised it nine times. 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. It had in October 2017 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.
Hindustan Petroleum Corporation, Bharat Petroleum Corporation and Indian Oil Corporation shares were down after imposition of special additional excise duty on petrol and diesel.
IOC closed 2.84 per cent lower at ₹ 152.10, HPCL fell 0.71 per cent at ₹ 286.60 and BPCL shed 2.80 per cent to ₹ 369.35 on the NSE.