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Petrol, Diesel remains most taxed products in India

Revenue secretary Ajay Bhushan Pandey has projected Rs 30,000 crore collection from the new cess in FY22

Tuesday February 2, 2021 12:39 PM, IANS

CESS on Fuel

New Delhi: The Narendra Modi government in New Delhi has imposed development cess on Petrol and Diesel in budget 2021 making fuel most taxed product in the country.

The basic price of petrol is just about Rs 29.30 a litre but more than 60 per cent load of taxes has put its retail price which customer gets at Rs 86.30 a litre in Delhi.

Similarly, the basic price of diesel is mere Rs 30.55 a litre but load it with 55 per cent taxes and the retail prices comes to Rs 76.48 a litre.

Revenue secretary Ajay Bhushan Pandey has projected Rs 30,000 crore collection from the new cess in FY22, but tax experts said that more than this amount may come from the Rs 2.5 per litre cess on petrol and Rs 4 per litre on diesel.

Also Read | Explained: How much Tax Indians pay on a litre of Petrol, Diesel

A Rs 1 per litre increase in duty on petrol and diesel normally accounts for Rs 12-15,000 crore revenue realisation for the government in a year. Going by this yardstick, the Governor should get additional Rs 40-50,000 crore from cess on petrol and diesel itself.

Even if the sales of auto fuel remains subdued in FY22 as businesses remain affected due to the pandemic, the collection may easily reach Rs 30,000 crore mark, which the finance ministry believes would come from Agri infra cess levy on 15 other items as well.

For the government, taxation on petrol and diesel has remained an easy way to raise taxes which is not easy to do in other sectors.

It is with this idea, excise duty on petrol and diesel were raised by historically high levels of Rs 10 and Rs 13 per litre respectively in May last year at the height of the pandemic to mobilise additional resources required for relief measures.

As per the budget documents, the Centre had received as an additional Rs 1.5 lakh crore from taxation on petrol and diesel in FY21 and this is expected to be maintained at similar level in FY22 with minor changes as a portion of revenue will also fall under the new cess.

 

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