Government hikes excise duty on petrol and diesel by Rs 2 per litre, no hike for customers

The Union government raises excise duty by Rs 2 each on petrol and diesel, according to a notification issued by Department of Revenue. The notification states that the revised excise duty will come into effect on April 8, 2025. The excise duty on petrol was increased to ₹13 per litre and that on diesel to ₹10, as per the order.

The Special Additional Excise Duty (SAED) has been increased by Rs 2 per litre each on petrol and diesel. There is no change in Basic Excise Duty (BED) rate. Amount collected through SAED is NOT a part of the divisible pool of taxes.

However, PSU Oil Marketing Companies (OMCs) have informed that there will be no increase in retail prices of petrol and diesel subsequent to the increase effected in Excise Duty rates announced on April 7.

The order states that the increased duty has been imposed by the Central government in public interest, under the ambit of section 5A of the Central Excise Act, 1944 and section 147 of the Finance Act, 2002.

Hitting an over three-year low of $62 a barrel last week, global crude oil prices are in a free fall which, coupled with an escalating trade war is fuelling bearish sentiments on global demand.

As oil prices slipped below $65 a barrel (bbl), pressure has started to build on the government for a cut in retail prices of diesel and petrol.

Global crude oil prices continued their downward descent on April 7 with Brent prices ruling at $63.23 per barrel (bbl) in early afternoon (India time), a decline of over 3 percent.

In India, the last reduction in fuel prices occurred on March 14, just before the Lok Sabha elections, following a period of price freezes that began on May 22, 2022. This freeze followed two cuts in excise duty that collectively reduced petrol and diesel excise by Rs 13 and Rs 16 per litre, respectively.

Goldman Sachs lowered its forecast for Brent crude oil's average price this year by 5.5 per cent to $69 per barrel and for US West Texas Intermediate (WTI) prices by 4.3 per cent to $66 per barrel, citing the risks of higher supply by the Organisation of Petroleum Exporting Countries and its allies (OPEC+) and the global tariff-led trade war, likely triggering a recession.