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Retail prices of petrol and diesel in India are currently running at an unprecedented height amid the rise in crude oil prices. Their prices have been increasing for the last nine months. Opposition parties and some sections of society are demanding a cut in taxes on petroleum fuel so that consumers get some relief.
ICICI Securities has said in one of its papers that we estimate that if there is no cut in excise duty on vehicle fuel in FY 2021-22, it will reach Rs 4.35 lakh crore, while the budget estimate is Rs 3.2 lakh crore. is. Accordingly, if the excise duty is also reduced by Rs 8.5 per liter on or before April 1, 2021, then the budget estimate for the next financial year will be achieved.
The company has hoped to cut excise duty amid improvement in demand, encouraging privatization and rising concerns over inflation, but the reduction may be less than Rs 8.5 per liter.
Between March and May 2020 last year, the excise duty on petrol was increased by 13 rupees and diesel by 16 rupees a liter. At present, excise duty is applicable on petrol at Rs 32.90 and diesel at Rs 31.80.
At that time, the price of crude oil in the international market reached a low of two decades. Taking advantage of the steep decline in the international market, excise duty was increased on both fuels. But now when the price of crude oil in the world is again reaching the height, the rate of excise duty is at the same height.
ICICI Securities says if the cuts are more soft, we believe that excise duty receipts in FY 2021-22 will be higher than the budget estimates.
Currently, central and state taxes account for up to 60 per cent of the retail price of petrol, while taxes account for 54 per cent of the retail price of diesel. Presently, the price of petrol in Delhi is Rs 91.17 and the price of diesel is Rs 81.47.
The central government increased the excise duty on petrol and diesel nine times between November 2014 and January 2016, taking advantage of the falling prices of crude oil in the international market. In total, the excise duty on petrol was increased by Rs 11.77 and on diesel by Rs 13.47 in 15 months. This also led to a good increase in the government exchequer.