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Excise Duty on Petrol, Diesel Raised; No Impact on Prices

Excise Duty on Petrol, Diesel Raised; No Impact on Prices

New Delhi: The government on Tuesday raised excise duty on petrol by Rs 2.25 per litre and on diesel by Rs 1 a litre but retail pump rates will not be increased as oil firms decided to absorb the duty change for the time being.

The second excise duty hike in three weeks will help raise an additional Rs 4,000 crore in four months to March as the government seeks to take advantage of a slump in global oil prices to shore up its revenues without stoking inflation.

Together with Rs 1.5 a litre excise duty hike effected from November 12, the government will mop up about Rs 10,000 crore in reminder of current fiscal year that will help contain budget deficit.

With Assembly elections underway in Jammu and Kashmir and Jharkhand, and polls due in Delhi soon, the state-owned fuel retailers have decided to absorb the excise duty change.

"This (excise duty hike) is not being passed on to the consumers," Indian Oil Corp chairman B Ashok told PTI.

"Since we had only yesterday revised petrol and diesel prices, we decided a change so soon is not warranted."

Oil firms had cut petrol and diesel prices by 91 paise a litre and 84 paise per litre, respectively, to factor in the slump in international oil prices. (Read more)

Asked if oil companies while revising rates on Monday had factored in a possible excise duty hike, he said the price cut was a true reflection of fall in international oil rate - from $93.23 per barrel in first fortnight of November to $87.21 in second half, and devaluation of rupee value - from Rs 61.46 to a US dollar to Rs 61.80.

"We are absorbing the excise duty increase for now. We are keeping track of the changing scenario and will take appropriate steps as the situation warrants at the next revision (due in mid-December)," Mr Ashok added.

Excise duty on normal or unbranded petrol has been hiked from Rs 2.7 per litre to Rs 4.95 a litre and on unbranded diesel from Rs 2.96 a litre to Rs 3.96. Total incidence of excise on petrol after including special excise duty and road cess will be Rs 12.95 while that on diesel will be Rs 5.96 a litre.

Similarly, excise duty on branded petrol has been raised from Rs 3.85 a litre to Rs 6.1 and on branded diesel, from Rs 5.25 to Rs 6.25.