Petrol, diesel prices: Govt rules out excise duty cut

The government on Monday ruled out any immediate reduction in excise duty to shield consumers from soaring international crude oil prices which have pushed the cost of petrol and diesel in the domestic market to record highs. The BJP-led government had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell.
 
While the refinery gate price of petrol and diesel is around Rs 35 per litre the rest of the retail price comprises central and state levies such as excise duty and VAT. Earlier in the day, Oil Minister Dharmendra Pradhan said the government was keeping a close eye on international prices but said there was no going back on free market pricing. He said consumers will benefit if petrol and diesel are brought under Goods and Services Tax (GST) regime at the earliest. Petrol price on Monday went up to Rs 73.83 a litre, while diesel rates touched an all-time high of Rs 64.69 in Delhi.
 
The Minister expressed his concerns over the impact on consumers, however, he did not offer any hint of a government intervention like cutting excise duty to give relief to the people. Speaking on excise duty on fuel, he said: "Centre and state bank on tax revenues to meet developmental needs. 42 per cent of collections from excise duty (on petrol and diesel) goes to states and out of the remaining 60 per cent is used to fund centre's share in development schemes in states."
 
Last year in October,  the government had cut excise duty on petrol and diesel by Rs 2 per litre and asked other states to reduce VAT levied on petroleum products. However, the duty cut had cost the government Rs 26,000 crore in annual revenue. After Centre's call for lower VAT, only four states -- Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh-- cut the fuel price.  "When there is a pricing issue, states should respond and cut VAT," Pradhan said.
 
The Minister also said that the GST Council should in the "interest of energy security and consumers" include petroleum products in GST. Petrol, diesel, natural gas, crude oil and jet fuel are currently not included in GST. India has the highest retail prices of petrol and diesel among South Asian nations as taxes account for half of the pump rates.

(With inputs from PTI)

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