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Will Budget FY19's excise duty cut reduce petrol, diesel prices?

02 February, 2018, 21:32 | Author: Melinda Barton
  • Budget 2018: Petrol, diesel prices hit all-time high on Budget day

Road and infrastructure cess on petrol and diesel manufactured in and cleared from four specified refineries in the northeast has been levied at Rs 4 per litre.

Fuel prices on forecourts at major supermarkets saw the largest increase with the average price for a litre of supermarket petrol rising to 119.76p and diesel to 122.45p. In Delhi, petrol price is Rs 73.10 per litre while diesel is Rs 64.11 per litre.

On Thursday, Finance Minister Arun Jaitley announced a cut in excise duty on fuel by Rs 2. "This is jumlanomics. The announcement to cut excise duty on petrol was fraudulent as the government has silently hiked the cess on fuel", said CPM chief Sitaram Yechury.

Dharmendra Pradhan, Minister of Petroleum of Natural Gas, on June 16, 2017, said, "With this historic step towards transparency and customer interest, the Indian Oil & Gas industry has joined the elite league of countries like U.S. and Australia wherein fuel prices are revised on a daily basis".

The difference between the price of petrol and diesel has narrowed drastically in the past few years.

The petrol and diesel prices do not come under the GST.

"We urge fuel retailers to be fair to motorists and pass on the current savings in the wholesale price of petrol and diesel at the pump. So, given that it is free pricing now, any projection on prices of petrol and diesel will be hard", Raju Kumar, tax partner, EY, said.

Previously, Road and Infrastructure cess on motor spirit stood at Rs 6 per litre. Union Oil Minister Dharmendra Pradhan had in January said his ministry is trying to bring petrol and diesel under the purview of the Goods and Services Tax (GST).

With this reduction, the FM said the government will bear the revenue loss of Rs 13,000 crore in the remaining part of FY18.

Union Finance Secretary Hasmukh Adia told a post-Budget media briefing that the changes won't affect the customer.

"While this will not have any impact on the end-consumer since the net effect is the same due to the introduction of the cess, the move will benefit the Centre", said Pratik Jain, Leader of Indirect Tax at PwC India.

In January, fuel prices touched a 40-month high in Mumbai.



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