Govt reduce excise duty on petrol by Rs 5 and diesel by Rs 10

Govt reduce excise duty on petrol by Rs 5 and diesel by Rs 10

The Centre on 3rd November, on the eve of Diwali, announced a reduction in the excise duty levied on petrol and diesel.

While the excise duty per liter of petrol has been slashed by Rs 5, the same has slashed down on diesel by 10 Rs. The latest price will come into effect from 4th November.

The reduction in excise duty is more on diesel due to more usage in the agriculture area, proposed a statement issued by the Ministry of Finance.

It said.

"The cut in excise duty on diesel will be double of petrol. The Indian farmers have, through the hard work, kept the economic growth momentum going even during the lockdown stage and the massive cut in excise on diesel will come as a raise to the farmers during the upcoming Rabi crop season,"

Every rupee cut in excise duty on petrol or diesel leads to a hit of approximately Rs 14,000 crore to the exchequer. Hence, a Rs 5 cut in excise duty on petrol and Rs 10 on diesel would lead to an income loss of around Rs 2.10 lakh crore for the Centre.

Over the past few months, the opposition parties demanded the Centre bring down the excise duty because of the surge in fuel prices.

Significantly, excise duty on petrol was hiked from Rs 19.98 per liter to Rs 32.9 last year to recover gain arising from international oil prices plunging to multi-year low as pandemic gulped demand. On diesel, the duty was hiked to Rs 31.80.

Govt reduce excise duty on petrol by Rs 5 and diesel by Rs 10 1unsplash image

Read More: Petrol price cut in Puducherry

While international prices have since recovered to around $85 and demand returned, excise duty has remained similar. This has resulted in petrol prices soaring above Rs 100-a-litre-mark in all significant cities, and diesel crosses the level in more than one-and-a-half dozen states.

The per liter petrol rate has breached the Rs 110-mark in Delhi and Rs 115-mark in Mumbai, whereas diesel is sold at Rs 98.42 per liter in the national capital and Rs 106.62 in Mumbai.

The fuel consumption has also accelerated in India over the past few months since the second wave of the COVID-19 pandemic receded.

According to the Centre, the excise duty reduction on fuel will not only relieve the consumers but is also expected to

"spur the overall economic cycle."

The Centre has also urged the state governments to take a cue from its decision to cut excise duty and

"commensurately reduce VAT on petrol and diesel to give relief to consumers."

The government, in its statement, cited the surging international crude oil rates as the prime reason behind the massive hike in domestic fuel prices.

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