Following the growing clamour for tax cuts in the prices of petrol and diesel, the Central government has finally reduced fossil fuel prices. At 8.30pm today, the Central government announced an excise duty reduction on petrol and diesel. While the excise duty on petrol will stand reduced by Rs 5 per litre, that on diesel will fall by Rs 10 a litre. The new prices comes into effect from midnight of November 4.
It’s a Diwali bonanza for consumers. On eve of Diwali, the Government announced that excise duty on petrol and diesel will be reduced by Rs 5 and Rs 10 respectively with effect from November 4. This will definitely come as a relief to most users, given that prices breached the Rs 110 mark for petrol and Rs 100 mark for diesel for sometime now.
As Autocar Professional had reported earlier,October 2021 has set a record when it comes to monthly price increases in the two fossil fuels. While the cost of diesel has risen sharply by Rs 8.78 a litre – or 8.97% – petrol in Mumbai became costlier by Rs 7.55 a litre – or 6.99% last month. (see data chart below).
Petrol and diesel are amongst the most heavily taxed items in the country. If you consider the petrol cost in Delhi, 30% (Rs 32.90) comprises excise duty and 23% (Rs 25.31) is State VAT (Value Added Tax). Club the two taxes and motorists are paying Rs 58.21 or 53% of each petrol litre as tax.
As regards diesel, the excise duty component is Rs 31.80 or 32.81%, while VAT is Rs 14.37 (up from Rs 13.77 on October 15) or 14.60% of the retail price. Together, the two taxes account for Rs 46.17 or 48% of the price a motorist pays to tank up on diesel. In FY2021, the Centre got Rs 334,894 crore excise duty from petrol and diesel
Apart from the fact that rising fuel prices also add to the inflation in the country, it is finally a huge burden for the consumer. The move is expected to provide some relief to the consumers.
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Diesel turned costlier by Rs 8.78 a litre, petrol by Rs 7.55 in October