The Finance Ministry in the amendment of the Finance Bill 2020, took the decision to root for raising the cap on excise duty on fuel by up to Rs. 8 per litre.
In an effort to mobilise resources for preparation of dealing with the Coronavirus pandemic, the government has decided to increase the excise duty levied on petrol and diesel by up to Rs. 8 per litre. The Finance Ministry took this decision in the amendment of the Finance Bill 2020 which was passed yesterday in the Lok Sabha. This decision has raised the cap on additional excise duty on petrol to Rs. 18 per litre from Rs. 10 and to Rs. 12 per litre on diesel from Rs. 4.
At a time when global crude oil prices are falling due to the pandemic, the hike in the excise duty will give the government a much needed boost to increase its margins in revenue generation. Although fuel consumption across the country has been taking a hit owing to the lockdown in 32 states and union territories in the country with movement restrictions in place to prevent the spread of the virus. Despite a global fall in oil demand, oil producers have not cut down production, leading to oversupply and free fall in oil prices.
It’s not clear at this stage, how much of the additional duty on the price of fuel will be passed on to the end consumer and how much of it will be borne by fuel retailers in the country. This will be the first hike in fuel prices in the country after eight straight days of fuel prices have remained unchanged.
As of now, petrol prices in Delhi stand at Rs. 69.59 per litre while diesel retails at Rs. 62.29 per litre. per litre.