As fuel prices are pinching the pockets of the common man, Finance Minister  Nirmala Sitharaman introduced an Agriculture Infrastructure and Development Cess (AIDC) of Rs 2.5 per litre on petrol and Rs 4 per litre on diesel.
She, however, said there would be no additional burden on the paying consumer as other cesses and duties had been rationalised accordingly.
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Sitharaman, while reading the Union Budget 2021-22 speech in Parliament on February 1, said: "I propose an Agriculture Infrastructure and Development Cess (AIDC) on a small number of items. However, while applying this cess, we have taken care not to put additional burden on consumers on most items."
Why it won't affect consumers?
With the imposition of the AIDC on petrol and diesel, the Basic Excise Duty (BED) and Special Additional Excise Duty (SAED) rates have been reduced so that the consumer does not bear any additional burden, she said.
Consequently, unbranded petrol and diesel will attract BED of Rs 1.4 and Rs 1.8 per litre, respectively. The SAED on unbranded petrol and diesel shall be Rs 11 and Rs 8 per litre, respectively.
Why fuel prices are so high?
The government had raised excise duty in March when crude oil prices were down. The excise duty on petrol was raised to Rs 32.98 per litre from Rs 19.98 and diesel to Rs 31.83 per litre from Rs 15.83. Every Re 1 a litre increase in excise duty adds approximately Rs 14,500 crore to the government’s kitty.
At present, taxes contribute 62 percent of the prices of petrol and 57 percent on diesel in Delhi. It is the higher taxes, along with rising global crude oil prices, that led to the current spike in petrol and diesel prices in India. The price of petrol in Delhi was seen at Rs 86.30 a litre and that of diesel at Rs 76.48 a litre on February 1.