NEW DELHI: The Center has stepped in to protect consumers and oil companies from high crude oil prices – which are rising 62% this month at Indian refineries compared to February – and cut excise duty, a move that will leave a Rs 130-crore gap in the finance ministry.As fuel retailers such as Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation lose around Rs 24 per liter of petrol and Rs 30 per liter of diesel sold, the government has cut the special additional excise duty on these two auto fuels by Rs 10 each. At the same time, India has imposed an export tax of 21.5 rupees per liter on diesel and 29.5 rupees per liter on aviation turbine fuel (ATF) to curb huge profits caused by shortage of fuel supply in the international market after China imposed export restrictions.The windfall profit tax will also help the Center partially offset the impact of the excise duty cut. Vivek Chaturvedi, chairman of the Central Board of Indirect Taxes and Customs, said the export windfall tax will bring in around Rs 1,500 crore in the first two weeks, while the government will have to forgo more than Rs 7,000 crore due to the excise duty cut. He said export duties would be reviewed every two weeks.
Govt imposes tax on ATF, diesel exports to curb windfall gains
Government will have to forgo over Rs 7,000 crore in revenue due to tax cutsThe windfall tax will help the Center partially offset the impact of the excise duty cut. The government will have to forgo over Rs 7,000 crore in revenue due to the excise duty cut.Chaturvedi said that like in 2022, export duties will be reviewed every two weeks to bring the duties in line with prevailing rates. The tax does not apply to fuel exports by public sector oil companies to Nepal, Bhutan, Bangladesh and Sri Lanka. It also does not apply to ATF provided to foreign aircraft.Finance Minister Nirmala Sitharaman said in the Union House: “In view of the current and evolving situation in West Asia, our government has decided to provide relief in the form of a significant reduction in excise duty on petroleum and diesel to ensure price stability… Going forward, we will continue to intensify our efforts to mobilize more non-tax revenue and our government will continue to be prepared to prudently manage the country’s fiscal position.” The surge in global energy prices has led to an increase in the average cost of crude oil at Indian refineries to $111.93 so far in March from $69 in February. While most countries have increased refined oil prices, Indian refiners have been hit after months of making profits.“The government has dealt a huge blow to tax revenue to ensure that high losses to oil companies are curtailed at a time when international oil prices are sky-high. With international prices soaring, export taxes have been imposed and must be paid by any refinery exporting abroad. “Amit Shah says people-centered governanceThe BJP and its allies on Friday praised the government’s decision to cut excise duty on petrol and diesel to absorb rising input costs in the countryMinister Amit Shah said it emphasized “people-centred governance and sensitivity-led decision-making”.Shah said while the world was plunged into fuel shortages due to conflicts in West Asia, pushing up global oil prices, the decision of the government led by Prime Minister Narendra Modi brought much-needed relief to citizens. Defense Minister Rajnath Singh calls it timelyThis is a decisive step, noting that it comes amid rising fuel prices in many countries.“This move highlights our government’s proactive approach and strong commitment to public welfare,” he said.Congress: It’s a ruse ahead of parliamentary voteCongress on Friday questioned the Center’s decision to reduce excise duty on petrol and diesel, saying the Modi government had not reduced oil prices when global crude was at multi-year lows and warned that it was just an excuse ahead of the assembly elections.Congress general secretary Jairam Ramesh said, “When global crude oil prices fell seven times in the past 12 years, consumer prices in India did not fall. Today’s announcement is due to the parliamentary elections. Wait until April 30th. “Party MP Manish Tewari said government revenue comes from taxpayers and ministers are not paying out of their own pockets to lower petrol prices “as Petroleum Minister Hardeep Puri is trying to pretend”.AICC spokesperson Pawan Khera said the government has been making money from cheap crude oil by not reducing petrol and diesel prices for the past 12 years.
