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On Tuesday night, the Center increased the excise tax on gasoline by Rs 10 and diesel by Rs 13 to a liter to recover part of the loss of revenue suffered by the government due to the Covid-19 blockade.
The change of functions will take effect from May 6, according to an official notification.
The change in the tax structure will not affect the retail price of gasoline and diesel due to the increase in excise duties.
A central government official said the income generated by these obligations will be used for infrastructure and other development expenses.
An increase of Re 1 per liter in excise duties on gasoline and diesel generally means an additional annual revenue of Rs 14.5 billion for the government. But revenue will accrue only when the demand for fuel, reduced due to prolonged blockade, increases substantially.
The Center’s move comes a day after the Aam Aadmi Party government in Delhi increased the value-added tax (VAT) on gasoline and diesel to raise money to fight coronavirus disease. This decision had increased the price of gasoline by Rs 1.67 per liter to Rs 71.26 and diesel by Rs 7.10 to Rs 69.39.
That decision was heavily criticized by the Bharatiya Janata Party and the Congress in Delhi. Outside of politics, it has been recognized that this may be the only way that governments are running out of money to pay employees’ wages.
In the evening, according to the ANI news agency, Punjab, ruled by Congress, decided to increase the price of gasoline and diesel by Rs 2 per liter. K Chandrasekhar Rao from Telangana, on the other hand, announced the decision to increase the liquor price by 16 percent.
A few hours later, the order from the Union finance ministry arrived.
This is the second time since March that the Center increases the tax on gasoline and diesel.
On March 14, the Center increased tariffs on gasoline and diesel to Rs 3 per liter. That rise had raised the total of the central taxes on gasoline to Rs 22.98 per liter and on diesel to Rs 18.83 per liter. However, the retail price of fuel remained unchanged due to declining crude prices.
Since March 16, oil companies have abandoned the practice of daily review of the two fuel rates, offsetting current and potential inventory losses.
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