There could be some relief in store for consumers after the government's decision to marginally reduce excise duty on petrol and diesel. After announcing a cut of Rs 2 per litre in the Basic Excise Duty levied on petrol and diesel, the Centre has now asked states to reduce taxes that they levy on fuel, in a bid to ease the burden on the common man.
The Centre expects states to reduce VAT on petrol and diesel and has also asked oil marketing companies to review petrol and diesel prices, a CNBC report cited an official as saying. States are likely to cut VAT by Rs 2 per litre while OMCs are likely to cut prices by Rs 1 per litre, it added.
On Tuesday, the Centre announced a cut in excise duty on petrol and diesel by Rs 2, effective October 4. The move, though little compared to the revenue both the central and state governments generate through taxes, comes as much-needed reprieve for consumers.
Also Read: Petrol, diesel prices cheaper by Rs 2/litre as govt decreases basic excise duty rate from Oct 4
On Tuesday, diesel prices in Delhi reached an all-time high of Rs 59.14 and soared to three-year high in Kolkata. Petrol prices too have been nearing their lifetime peaks across the country.
Prices eased on Wednesday following the Centre’s decision on excise duty, with diesel and petrol retailing at Rs 56.89 in Delhi and Rs 68.38 per litre, respectively. The Centre’s share has come down from Rs 21.48 per litre to Rs 19.48 per litre of petrol and diesel, effective Wednesday.
Value Added Tax or VAT accounts for a major chunk of revenue for states. Delhi, for example, charges VAT at 27 per cent (on fuel as well as dealer commission).
According to the Finance Ministry, the move is an attempt to "cushion the impact of rising international prices of crude petroleum oil, and petrol and diesel on their retail sale prices".
It further stated that the government will incur revenue loss of about Rs 26,000 crore in full year, and Rs 13,000 crore in the remaining part of the current financial year.
Opposition parties blamed the high tax burden on these fuels behind the onslaught on the common man and asked the government to take immediate steps to bring down the rising petrol and diesel prices.
