Excise Duty on Fuel(Petrol and Diesel) in India
As of May 2022, the excise duty on diesel is Rs.6 per litre and for petrol is Rs.8 per litre. In this article, we will discuss about the current excise duty the Indian government charges on fuel.
Excise Duty on Fuel in India
As on 4 November 2021, the excise duties on diesel and petrol are Rs.21.80 and Rs.27.90 per litre, respectively. After another reduction in May 2022, the excise duty on diesel and petrol further decreased to Rs.15.80 and Rs.19.9 per litre. The central excise duty levies taxes on 20% of the petrol price and 17.6% of the diesel price.
Breakdown of Excise Duty on Petrol in India
Given below is a detailed insights on the excise duty on petrol as of May 2022:
Elements | Amount Per Litre |
Basic excise duty | Rs.1.80 |
Road and infrastructural development cess | Rs.8 |
Additional excise duty | Rs.7.60 |
Agricultural and infrastructural development cess | Rs.2.50 |
Total excise duty | Rs.19.90 |
Breakdown of Excise Duty on Diesel in India
The following are the detailed information on the excise duty on diesel as of May 2022:
Elements | Amount Per Litre |
Basic excise duty | Rs.1.80 |
Infrastructural development and agricultural cess | Rs.4 |
Infrastructural and development cess | Rs.8 |
Additional excise duty | Rs.2 |
Total excise duty | Rs.15.80 |
Why Does the Government Levy Central Excise Duty on Petrol and Diesel?
The Indian Government collects substantial central excise tax petrol and diesel. The government mentioned that the centre levies excise duty for collecting lump sum revenue. These funds will then be used for various development purposes. The latest decrease in the excise duty on petrol and diesel will witness a revenue implication of around Rs.1 trillion. The main reason behind this step is to solve the rising inflation in the country.
What Are the Factors Determining the Excise Duty in India?
The following are the factors that determine the excise duty in India:
Crude Oil Price
The government surges the excise duty on diesel and petrol when the cost of international crude oil is less. Apart from this, it also reduces the excise duty when the price of the crude oil is higher.
Demand of Fuels
If the demand of petrol and diesel is lower, the centre is seeking for an avenue in increasing its tax collection to fulfil regular financial obligations. Thus, charging a higher excise duty provides a big relied from such situation.
Financial Emergency
The GST does not apply to fuel. Therefore, the Center may increase excise taxes when a financial emergency arises. This could involve a healthcare crisis or a recession across the world.
FAQs on Excise Duty on Fuel in India
- What is the central and state tax on petrol in India
The central tax on petrol is Rs,19.90. On the other hand, the state taxes on petrol varies from state to state.
- Is central excise duty on fuel similar all over India?
Yes, the central excise duty on fuel is same across the country.
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