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The Union government, on Monday, April 7, increased the excise duty by Rs 2 on petrol and diesel. The move comes amid US President Donald Trump’s new tariffs and fluctuating global oil rates.
As per the latest notification by the Union Finance Ministry, the said change will come into effect on April 8.
However, the changes will not impact consumers. According to the Petroleum and Natural Gas Ministry, there will be no increase in the retail prices of petrol and diesel.
While any change in taxes is normally passed on to consumers, there will be no change in the retail selling price of petrol and diesel as the excise hike will be set off against the reduction in retail prices that was warranted from the fall in international oil prices.
Fluctuating international oil prices
International oil prices have slumped to their lowest since April 2021 as escalating trade tensions between the United States and China stoked fears of a recession that could cut oil demand.
Brent futures lost USD 2.43, or 3.7 per cent, to USD 63.15 a barrel on Monday while US West Texas Intermediate crude futures were down USD 2.42, or 3.9 per cent, at USD 59.57.
India is 85 percent dependent on imports to meet its oil needs.
“PSU Oil Marketing Companies have informed that there will be no increase in retail prices of #Petrol and #Diesel, subsequent to the increase effected in Excise Duty Rates today,” the oil ministry said in a post on X.
Excise duty price during Modi rule
The Modi government, during its 11-year rule, hiked excise duty whenever international oil prices fell.
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.
In all, duty on petrol rate was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months, which helped the government’s excise mop-up more than double to Rs 2,42,000 crore in 2016-17, from Rs 99,000 crore in 2014-15.
The government had cut excise duty by Rs 2 in October 2017, and by Rs 1.50 a year later. But it raised excise duty by Rs 2 per litre in July 2019. It again raised excise duty in March 2020, by Rs 3 per litre each.
Excise duty was raised by Rs 13 and Rs 16 per litre on petrol and diesel between March 2020 and May 2020.
But in the following years, it rolled back the Rs 13 and Rs 16 per litre excise duty hike as international oil prices soared. This helped bring down petrol prices from a record hike of Rs 105.41 a litre in Delhi and the highest ever diesel rate of Rs 96.67.
Just before the 2024 General Elections were announced last year, the government had cut petrol and diesel prices by Rs 2 a litre each.
Petrol currently costs Rs 94.77 a litre in Delhi and Rs 87.67 is the price for a litre of diesel.
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