Government raises cap on excise duty on petrol and diesel

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On March 14, the Centre increased the excise duty on petrol and diesel by Rs 3 a litre each

The government has increased the cap on special additional excise duty  on petrol and diesel by Rs 18 and Rs 12 per litre, according to amendments passed in the Finance Bill.

The current cap on the same was Rs 10 for petrol and Rs 4 for diesel.

On March 14, the Centre increased the excise duty on petrol and diesel by Rs 3 a litre each. An additional Re 1 per litre was also levied on both petrol and diesel under the road and infrastructure cess (RIC).

The March 14 excise duty hike had reportedly helped the government collect over Rs 2,000 crore.

While the benefit of reduction of crude prices in the first quarter of 2020 has significantly gone to the consumer, the government has taken this step of increasing duty to raise some revenue in view of a tight fiscal situation. This would help in generating resources for the development of infrastructure.

The increase in excise duty would, in normal course, result in a hike in petrol and diesel prices. But, most of it is going to be adjusted against the fall in rates that would have necessitated because of the slump in international oil prices.

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Coronavirus in India: Cap on petrol, diesel excise duty raised

Earlier this month, the Centre increased the excise duty on petrol and diesel by Rs 3 per litre each. This excise duty hike had reportedly helped the government collect over Rs 2,000 crore.

Government has reportedly increased the cap on special additional excise duty on petrol and diesel. With this, the limit on excise duty for petrol has been raised by Rs 18 per litre, and on diesel by Rs 12 per litre, reported CNBC-TV18.

Earlier, the cap on special additional excise duty for petrol and diesel was Rs 10 and Rs 4, respectively. Removing this limit will give goverment the flexibility to raise the same in coming days. Earlier this month, Centre had increased excise duty on petrol and diesel by Rs 3 per litre each. This excise duty hike had reportedly helped the government collect over Rs 2,000 crore.

 

These excise duty hikes come on the back of decline in crude oil prices amid a price war between Saudi Arabia and Russia. While earlier fall in crude prices this year had been passed on to the customer, the government is looking to cash in on the recent one to shore up funds in view of the coronavirus outbreak. The funds collected from the excise duty hike will be utilised for meeting emergency expenses during the current contagion.

"The increased excise revenue from oil should not be used for bridging the fiscal gap and pleasing the markets; rather sound economics demands it must be used as a fiscal package for income support to the people working in the unorganised sector who are already facing the brunt of loss of jobs," a recent SBI Ecowrap report said.

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Government amends law to get powers to raise excise duty on petrol, diesel by ₹8/litre in future

 

• The amendment along with the Finance Bill was passed without a debate in the Lok Sabha
• The government had on March 14 raised excise duty on petrol and diesel by ₹3 per litre each to raise an additional ₹39,000 crore in revenue annually.

 

NEW DELHI : The government on Monday amended the law to get enabling powers to raise excise duty on petrol and diesel by ₹8 per litre each in future.

Finance Minister Nirmala Sitharaman moved an amendment to the Finance Bill, 2020, to raise the limit up to which the government can raise special excise duty on petrol and diesel to ₹18 per litre and ₹12, respectively.

The amendment along with the Finance Bill was passed without a debate in the Lok Sabha.

The government had on March 14 raised excise duty on petrol and diesel by ₹3 per litre each to raise an additional ₹39,000 crore in revenue annually. This duty hike included ₹2 a litre increase in special additional excise duty and Re 1 in road and infrastructure cess.

This hike took the special additional excise duty to maximum permissible in law -- ₹10 in case of petrol and ₹4 in case of diesel.

Now, through an amendment of the Eighth Schedule of the Finance Act, this limit has been increased to ₹18 per litre in case of petrol and ₹12 in case of diesel.

This is an enabling provision and no change in excise duty is being done as of now, an official said.

The amendment gives powers to the government to raise the duty by up to ₹8 per litre in petrol and diesel at any time it wishes.

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