Govt's tax collections on petrol and diesel jump 88% to Rs 3.35 lakh crore

Jul 24, 2021 2 min read
Govt's tax collections on petrol and diesel jump 88% to Rs 3.35 lakh crore

The Centre has collected ₹ 94,181 crore through excise duty levy on petrol and diesel during the first quarter period of 2021-22.

As per details revealed in the Parliament on July 19, the union government's tax collections on petrol and diesel jumped by 88 per cent to Rs 3.35 lakh crore in the FY2021 after excise duty, as diesel's contribution was more than twice.

The excise duty collection for FY2021's on petrol-diesel jumping to Rs 3,34,894 crore, as compared to FY2020's which was Rs 1.78 lakh. This is a massive 87.81 percent year-on-year (YoY) increase. The difference arise because of much reduced vehicle use and fuel purchases in the first few months of last fiscal due to the pandemic and several restrictions imposed, which muted economic activity and stalled mobility.

One reason for the considerable increase to 88 percent YoY increase in excise duty collection on petrol was the hefty increase in tax, from Rs 19.98 per litre to Rs 32.9 per litre to re-earn gains arising from international oil prices due to pandemic. The same on diesel, jumped to Rs 31.83 per litre from Rs 18.83 per litre from March 2020. This explains the concept of collection of excise duty from diesel is more than twice than that of petrol.

The Minister of State for Petroleum and Natural Gas, Rameswar Teli, replied, in the last year, 2021-21, petrol was hiked 76 times and diesel by 73 times. As a result, petrol became costlier by Rs 20.97 a litre and diesel by Rs 18.58 a litre, within the span of 12 months - from April 1, 2020, to march 31, 2021, in New Delhi.

As per the data, petrol saw price reduction 10 times and diesel 24 times. There are no hikes on 153 days for petrol and 168 days for diesel.

Weighty portion of taxes in petrol and diesel prices

One of the reasons for higher rates of fuel prices is the high level of freight rates and VAT/local levies. In Delhi, for instance, on July 16, 2021, petrol cost Rs 101.54 a litre of which 32.40 percent includes excise duty and 23 percent is State VAT. Add both the taxes and people are paying Rs 56.33 or 55.467% per petrol litre as tax.

Same with diesel too. It costs Rs 89.87 a litre in the capital city on July 16, the excise duty component was Rs 31.80 or 35.38 percent, while VAT is Rs 13.14 or 14.62 percent of the retail price. Club the two taxes, Rs 44.94 or exactly 50 percent of the price a motorist pays to fill up the tank.

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