undergroundnewsroom.com March 23, 2018

An excise duty cut with a rider

02 February 2018, 09:31 | Gordon Grant

Budget 2018: Petrol, diesel prices hit all-time high on Budget day

Petrol Pumps

"The budget has changed the tax structure for MS and HSD with more taxes aligned towards Road and Infrastructure cess and less on excise duty, so that adequate funds will be available for the road building programme, without impacting the consumer prices", K. Ravichandran, Senior Vice President and Group head at ICRA said.

In the budget, the Modi government has chose to reduce the excise duty on petrol and diesel by taking big decisions.

The basic excise duty on unbranded petrol was slashed by Rs 2 from Rs 6.48 per litre and on branded petrol from Rs 7.66 per litre. The Oil Ministry had pushing the finance ministry for a cut in excise duty on petrol and diesel. The cut in duty has been offset by an additional levy of Rs 8 per litre under Levy of Road and Infrastructure Cess on petrol as well as diesel, according to Memorandum Explaining the Provisions of the Financial Bill, 2018, part of the budget document.

RAC fuel spokesman Simon Williams says that, while costs are sure to be taking their toll on drivers, there is a "glimmer of hope" that fuel prices will drop again in the near future.

The difference between the price of petrol and diesel has narrowed drastically in the past few years. At present, prices of petrol and diesel are skyrocketing. On the other hand, the incumbent crude oil price is hovering around $71 per barrel mark, which has resulted in the rise of domestic petrol rate to as high as Rs 80.77 in Mumbai region. Speaking to the public, they still have to buy petrol and diesel at the same price as it is now. People had to pay RS 73.05 for a litre.

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In fact, if we understand the pattern, excise duty on fuel product has not undergone any changes at all.

Because of the excise duty cut, diesel prices had on October 4, 2017 come down to Rs 56.89 and petrol to Rs 68.38. However, no such relief came from Budget 2018-19.

The FM has, however, further lowered the excise duty revenue receipt estimate for FY19 to Rs 259,600 crore.

The introduction of Road and Infrastructure Cess has been made to partly finance the expenditure of Ministry of Road Transport and Highways.

However, a subsequent rally has wiped away all the gains and prices have touched new highs.

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