The government on Tuesday evening hiked excise duty by a record Rs 10 per litre on petrol and Rs 13 per litre on diesel to garner Rs 1.6 trillion additional revenue as it repeated its time-tested formula of not passing on gains arising from a slump in worldwide oil prices.
According to a notification issued by the Central Board of Indirect Taxes and Customs, special additional excise duty on petrol has been hiked by Rs 2 per litre and road cess has been hiked by Rs 8 a litre.
"The revenue generated from these duties shall be used for infrastructure and other developmental item of expenditure", it added.
The excise tax on petrol was Rs 9.48 per litre when the Modi government took office in 2014 and that on diesel was Rs 3.56 a litre. A reduction has occurred only twice.
Delhi government's latest move comes due to conditional relaxations in the third phase of the lockdown which expects see an uptick in the number of road users and fuel consumption. Similarly, prices for a unit of petrol and diesel stand at Rs 73.55 and Rs 65.96, respectively, in Bengaluru; and at Rs 75.54 and Rs 68.22 respectively, in Chennai.
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A ministry spokesman has also repeatedly promoted the idea - without evidence - that Covid-19 might have originated in the US. Since emerging in China previous year , the virus has killed 230,000 people worldwide including 63,000 in the US.
Before the introduction of Goods and Services Tax (GST), the state had control over bringing in more revenue by tweaking tax rates that fall under the jurisdiction of the state government. This would help in generating the resources to meet the expense of coronavirus fight.
"The excise duty hike though on expected lines could have been taken once demand had fully recovered".
The price of a barrel of Brent crude fell from 64 U.S. dollars at the start of the year to less than 19 dollars in April, due largely to plummeting demand from a global economy hit by the coronavirus pandemic. Similarly, with 70 per cent corona cess on liquor, its prices have also reached the highest level in Delhi. "India has been able to fill its strategic reserves of petroleum products". Nearly 20 percent of our demand has been stored.
RAC fuel spokesman Simon Williams said: "It's ironic that at a time when many of us are only making a fraction of the trips we did before the lockdown, prices have fallen to this level".