Raised five times within a year, now taxes exceed actual cost of petrol

New Delhi: With excise duty being hiked five times in a year, taxes and duties now exceeded the actual cost of production of petrol. As much as Rs 31.20 in the retail price of Rs 60.70 a litre of petrol in Delhi is because of central and excise duties.[caption id=“attachment_2501524” align=“alignleft” width=“380”]  A worker holds a fuel nozzle at a petrol pump in Mumbai June 11, 2010. India’s oil ministry wants free pricing of petrol and diesel to help state firms who are forced to sell fuel at low, state-set prices. India’s cabinet did not discuss any proposal to raise fuel prices or reform the sector on Thursday, a government minister said, continuing the uncertainty over a move that faces strong political resistance.REUTERS/Danish Siddiqui (INDIA - Tags: ENERGY)[/caption] Based on average cost of gasoline and foreign exchange rate during the second half of October, it costs Rs 24.75 to produce a litre of petrol at refineries, industry officials said. After adding company margin and other costs, the price charged to a petrol pump dealer is Rs 27.24 per litre. On this price is added Rs 19.06 of excise duty that the Centre collects and a dealer commission of Rs 2.26 per litre. VAT or sales tax makes up for Rs 12.14 in the price of Rs 60.70 per litre in Delhi. Similarly, a litre of diesel at the petrol pump costs Rs 45.93 but its cost for a refinery is just Rs 24.86. After adding margin, oil companies transfer it to retail petrol pumps for Rs 27.05, officials said. To this is added an excise duty of Rs 10.66 per litre and a dealer commission of Rs 1.43 a litre. VAT in Delhi adds another Rs 6.79 to take the retail selling price to Rs 45.93. The government had from 7 November raised excise duty on petrol by Rs 1.60 per litre and on diesel by 40 paise. The oil companies did not pass on this duty hike to consumers and absorbed all of it at the cost of their margin. The increase in excise duty on the fuels is likely to yield an additional revenue of about Rs 3,200 crore to the government during the rest of the current fiscal. The government had collected Rs 99,184 crore in excise collections from the petroleum sector in 2014-15. This was Rs 33,042 crore in the first quarter of current fiscal. The basic excise duty on unbranded or normal petrol was increased from Rs 5.46 per litre to Rs 7.06 a litre, according to a CBEC notification. After including additional and special excise duty, the total levy on petrol will be Rs 19.06 per litre as against Rs 17.46 at present. Similarly, on unbranded or normal diesel, excise duty has been increased from Rs 4.26 per litre to Rs 4.66 a litre. After including special excise duty, total incidence of excise duty on diesel will be Rs 10.66 per litre as against Rs 10.26 now. The government had previously, in four instalments, raised excise duty on petrol and diesel between November 2014 and January 2015 to take away the reduction in retail rates that was warranted from falling international oil prices. The four excise duty hikes during this period totalled Rs 7.75 per litre on petrol and Rs 6.50 a litre on diesel. It led to about Rs 20,000 crore in additional revenue to the government, helping it meet its fiscal deficit target. Tax on petrol and diesel was first raised by Rs 1.50 a litre each from 12 November, 2014. Then again, from 2 December 2014, the excise duty on petrol was raised by Rs 2.25 per litre and by Re 1 on diesel. This was followed by government hiking excise duty on petrol and diesel by Rs 2 per litre each from 2 January 2015 and a similar proportion from 16 January 2015. PTI