Amid tax revenue loss from the ongoing lockdown, the central government will stand to gain close to Rs 1.6 lakh crore in additional income this fiscal year after a record increase in excise duty on petrol and diesel, a PTI report said.
The hike in duties will help the government make up for a decline in tax collections due to in a slowing economy and closure of some businesses due to the pandemic.
Late on Tuesday evening, the central government hiked excise duty on petrol by Rs 10 per litre and that on diesel by Rs 13 a litre to mop up taking advantage of the massive fall in international oil prices. Final retail prices at petrol pumps have not been affected as the two-decade low oil prices provide enough room for an increase in taxes.
Further, petrol and diesel prices have not been revised by state-owned oil marketing companies IOC, HPCL and BPCL since 16 March despite the change in international oil prices. However, in some states, local taxes have also been increased, affecting retail price.
In Delhi, petrol and diesel prices were hiked on Tuesday sharply by Rs 1.67 and Rs 7.10 per litre, respectively, after 50 days of stagnancy due to an increase in VAT in the national capital.
It is the second hike in excise duty by the central government in less than two months and will help the government garner over Rs 1.7 lakh crore in additional revenues annually at 2019-20 level of consumption, a PTI report said citing unnamed industry officials said.
Considering the slump in consumption due to travel restrictions imposed by coronavirus lockdown, the gains in the remaining 11 months of the current fiscal year (April 2020 to March 2021) will be close to Rs 1.6 lakh crore, they said.
Together with Rs 39,000 crore in annual revenues gained from the 14 March excise duty hike of Rs 3 per litre each on petrol and diesel, the government stands to gain as much as Rs 2 lakh crore.