Centre May Raise Tax On Petrol-Diesel To Deal With Economic Crisis

To deal with the economic crisis triggered by the Coronavirus pandemic, the central government is planning to raise excise duty on petrol and diesel. 

The government can increase the excise duty on both fuels from Rs 3-6 per litre if the government felt the need to mobilise more resources to finance additional economic recovery packages to fight COVID-19 related disruptions.

The increase in excise duty can fetch the government an additional revenue of Rs 60,000 crore for a complete year. By March, the government can mobilise Rs 30,000 crore.

The price of crude oil in the global market is currently around $40 per barrel, compared to $45 per barrel a month ago.

In March this year, the Centre had taken the Parliamentary approval to raise excise duty of Rs 18 on petrol and Rs 12 on diesel. Then in May, the government raised special additional excise on petrol by Rs 12 and on diesel by Rs 9.

Once again, the government plans to raise the excise duty on petrol to Rs 6 and on diesel to Rs 3. However, the government is mulling over this proposal.

Government strategists believe that this is the right time to increase excise duty, for if the tax is increased now, there will be no difference in the retail prices of petrol and diesel.

Currently, 70% tax is levied on petrol and diesel in India. Further increase in excise duty could increase the rate to 75-80% level