New Delhi: Government has taken the bait provided by unusually low global oil prices to raise excise duty on petrol and diesel to raise revenue that has been severely impacted by a slowing economy.
It raised excise duty on petrol and diesel by Rs 3 per litre that would increase the retail price of the two petroleum products between Rs 3-4 per litre depending on the taxation structure in different states.
The Centre, however, could gain in excess of Rs 45,000 crore of revenue for full year.
As per a notification issued by Central Board of Indirect Taxes and Customs, special duty on petrol and diesel has been hiked by Rs 2 per litre to Rs 10 and Rs 4 per litre, respectively.
Additionally, road cess on the two products was also raised by Rs 1 per litre to Rs 10 per litre, effectively increasing the central duty to Rs 3 per litre. The new rates are effective from March 14.
However, lower global oil and product prices could provide cushion to the government not to raise the retail prices to that level and rather PSU oil marketing companies may be asked to absorb immediate need for a hike. This can be covered if oil prices keeps soft and falls further.
The current increase in duty and resultant hike in retail Price of petrol and diesel could have multiplier effect on the economy raising prices of several essential products and services and push up inflation. In February, the consumer price inflation has fallen but this could rise on impact of higher transportation fuel prices.