Centre cuts excise duty on petrol by Rs 8 per litre, diesel by Rs 6 per litre

The cut in fuel taxes is likely to come as a boost to users of petrol/diesel driven vehicles, manufacturers and farmers

FPJ BureauUpdated: Saturday, May 21, 2022, 11:29 PM IST
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Centre cuts excise duty on petrol by Rs 8 per litre, diesel by Rs 6 per litre | (PTI Photo/Atul Yadav)

MUMBAI: Responding to public sentiment over inflationary pressure, which is well beyond the comfort level of the RBI, the government has decided to cool down the tax component in petrol and diesel. It has accordingly reduced the excise duty on fuel, which will lead to a welcome drop in prices of petrol and diesel.

‘‘We are reducing the central excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre. This will reduce the price of petrol by Rs 9.5 per litre and of diesel by Rs 7 per litre," said Union Finance Minister Nirmala Sitharaman on Saturday.

The finance minister said this will have a revenue implication of close to Rs 1 lakh crore per year for the Central government. But, the Narendra Modi-led government has been dedicated towards the welfare of the poor since it assumed office, she added.

The Centre has also asked states to cut duty on auto fuels. Sitharaman said: "I wish to exhort all state governments, especially the states where reduction wasn't done during the last round (November 2021), to also implement a similar cut and give relief to the common man."

Sitharaman made the announcement taking into account the disruptions in supply chains caused by the Ukraine conflict as well as the world’s recovery from the Covid-19 pandemic. She said both these events had led to inflation and economic distress in numerous countries.

However, despite the challenging international situation, the government has ensured that there are no shortages or scarcity of essential goods. Even a few developed countries couldn't escape some shortages or disruptions, the Finance Minister added. The government is committed to ensuring that prices of essential items are kept under control, she added.

Also, keeping the deprived sections in mind, the government will give Rs 200 per cylinder subsidy to Ujjwala Yojana beneficiaries for 12 cylinders in a year to help ease some of the burden arising from cooking gas rates rising to record levels. This will have a revenue implication of around Rs 6,100 crore a year.

The cut in fuel taxes is likely to come as a boost to users of petrol/diesel driven vehicles, manufacturers and farmers. High fuel prices have been hurting the margins of corporates as well as farmers, who contribute a significant chunk to the economy. This, in turn, will augur well for sustained GDP (gross domestic product) growth.

Spiking global oil prices have pushed up the retail prices of petrol and diesel to a record high in India, which is the world's third-biggest oil importer and consumer and ships in about 85% of its oil needs from overseas.

Further, the government has reduced the customs duty on raw materials and intermediaries for plastic products where the country's import dependence is high. It will result in reduction of cost of final products. A notification with specific details on all these mention moves will be issued by the Centre within the next hours

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