Tax Collections On Petrol, Diesel Jumped 1.5 Times In Last 3 Years
Gas pumps for petrol and diesel stand at a Bharat Petroleum Corp. gas station in Haridwar, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

Tax Collections On Petrol, Diesel Jumped 1.5 Times In Last 3 Years

As petrol and diesel prices rise to newer records by the day across India, fuelling inflation, the government said higher taxes on fuel have boosted its collections.

Central excise duty collections on petroleum products rose by nearly 1.5 times to Rs 3.45 lakh crore in the last three years, according to a written reply by Rameshwar Teli, minister of state in Ministry of Petroleum and Natural Gas, in the Lok Sabha.

While auto fuel prices have surged tracking the rise in global crude oil, taxes comprise a major chunk of prices at the pump. Central and state taxes as a percentage of the base price stood at 125.2% for petrol and 100.3% for diesel as on July 15, the minister said.

Crude oil prices have risen 16% so far in the ongoing fiscal, going past the $75 per barrel-mark. That's resulted in higher retail prices in many parts across the country. For instance, petrol and diesel sell at Rs 101.2 per litre and Rs 89.7 per litre, respectively, in Delhi as on July 15.

Central excise duty collection on petrol jumped 1.5 times in the three years till FY21 to Rs 1.02 lakh crore, the minister said. For diesel, the collections jumped 1.6 times to Rs 2.33 lakh crore.

Since February 2018, excise duty on unbranded petrol has risen 69% from Rs 19.48 per litre to Rs 32.9 per litre. For unbranded diesel, excise duty has more than doubled to Rs 31.8 per litre.

In the ongoing fiscal, petrol and diesel prices were hiked 39 and 36 times, respectively, the official data shows.

From 2018-19, while petrol prices have risen 352 times and fell 247 times, the corresponding numbers for diesel are 328 and 263, respectively. LPG prices were increased 26 times and decreased 11 times, according to the data.

“Prices of petrol and diesel are market-determined with effect from June 2010 and October 2014 respectively,” the minister said. “Since then, the public sector oil marketing companies have been taking appropriate decisions on pricing of petrol and diesel on the basis of international product prices and other market conditions.”

With most of India’s fuel demand met through oil imports, its import bill rose, the data shows. While import dependency of crude oil jumped from 83.8% in 2018-19 to 85.4% in the current financial year (April-May 2021), price of the Indian basket of crude oil jumped over 7% in the last three years.

In reply to a separate question, the minister said a total of 85.82 lakh new domestic LPG connections were provided by state-run oil marketers between April 2020 and March 2021. The highest number of connections were provided in Uttar Pradesh, at 14.86 lakh, followed by Maharashtra’s 9.85 lakh and 9.6 lakh in Bihar.

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