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After excise cut on fuels, Siddaramaiah rules out sales tax reduction

02 February 2018

While providing Rs 2 per litre excise cut in fuel products, Jaitley also slapped a new Rs 8 per litre "Road and Infrastructure Cess" on motor spirit.

In the budget, the Modi government has chose to reduce the excise duty on petrol and diesel by taking big decisions. Petrol price in Delhi was at 73.05 per litre while diesel price was at Rs 64.11 per litre on Thursday.

Finance Secretary Hasmukh Adhia said that even though excise duty on petrol and diesel will decrease by 2 rupees, but practically their final value will not have any effect. Basic excise duty on branded diesel was also reduced from Rs 10.69 per litre to Rs 8.69 per litre.

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Since then prices are revised on daily basis.

However, these reductions are offset by the introduction of a Rs. 8 per litre road and infrastructure cess on petrol and high speed diesel.

The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices. Today, price of petrol went up by 15 paisa per liter and that of diesel by 19 paisa. On diesel as well, the excise duty has been cut by Rs 2 to reach Rs 6.33 per litre.

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According to TaxGuru data, total excise duty on motor spirit remains unchanged. That is the only change we have made. 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). Production curbs by the Organisation of the Petroleum Exporting Countries and high demand have led to the surge. "Considering that the Union government wants to invest in development of the infrastructure sector, this cess will be an additional source of income for this objective", Mr. Jain added.

The FM has, however, further lowered the excise duty revenue receipt estimate for FY19 to Rs 259,600 crore. Only the devolution of cess has been changed, he said.

It may ne mentioned that higher crude price comes as a negative outcome for India, as the government is impacted by this trend in two ways.

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After excise cut on fuels, Siddaramaiah rules out sales tax reduction