The government increases excise taxes on gasoline by a record 10 rupees, diesel by 13 rupees

NEW DELHI: The government on Tuesday afternoon walked Special tax at a record Rs 10 a liter and Rs 13 a liter to earn Rs 1.6 lakh crore additional revenue as he repeated his time-tested formula of not passing on gains from a drop in international oil prices.

Retail gasoline and diesel prices will not be affected by the tax changes, as state oil companies will adjust them against the recent drop in oil prices, industry officials said.

According to a notification issued by the Central Board of Indirect Taxes and Customs, special additional Special tax on petrol has been hiked by Rs 2 per litre and road cess has been hiked by Rs 8 a litre.

In case of diesel, special additional Special tax has been hiked by Rs 5 per litre and road cess has been raised by Rs 8 a litre.

With this, the total incidence of Special tax on petrol has risen to Rs 32.98 per litre and that on diesel to Rs 31.83.

The gasoline tax was Rs 9.48 per liter when the Modi government took office in 2014 and the diesel tax was Rs 3.56 per liter.

This is the second time since March that the government has hiked Special tax to mop up gains arising from fall in international oil prices. It had raised Special tax on petrol and diesel by Rs 3 per litre each in March to garner about Rs 39,000 crore.

Petrol and diesel prices have not been revised since March 16 despite international oil prices falling to a two-decade low. The gains will now be adjusted against the Special tax hike.

Gasoline costs Rs 71.26 per liter in Delhi and a liter of diesel costs Rs 69.39.

The government had between November 2014 and January 2016 raised Special tax on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.

In total, the tax on the gasoline rate increased by Rs 11.77 per liter and on diesel by 13.47 per liter in those 15 months that helped the government special tax cut more than Rs 2.42 billion Rs. in 2016-17 from Rs 99,000 crore in 2014-15.

It cut Special tax by Rs 2 in October 2017 and by Rs 1.50 a year later. But it raised Special tax by Rs 2 per litre in July 2019.

Government sources said the Center has taken this step of increasing the duty to raise some revenue in light of a tight fiscal situation. This would help generate the resources to cover the costs of fighting the coronavirus.