As mentioned by a senior official on Monday, the finance ministry is not in favour of cutting excise duty on fuel prices even though petrol prices hit a 55-month high in the national capital today at Rs 74.50 per litre, while diesel rates reached Rs 65.75. The finance ministry instead wants states to cut sales tax or Value Added Tax (VAT) on fuel, he added.
It must be mentioned that the government wants to reduce fiscal deficit to 3.3% of the GDP in the current fiscal from 3.5% of the last fiscal. “Excise duty cut would be a political call, but is not advisable if we have to stick to the fiscal deficit glide path outlined in Budget,” he said.
“Every rupee cut of excise on fuel will result in a loss of Rs 13,000 crore to the government,” the official said, adding that the oil ministry has not yet officially asked for a cut in fuel excise duty.
State-owned oil firms, which have been since June last year revising auto fuel prices daily, today raised petrol and diesel rates by 10 paise per litre each in Delhi, according to a price notification.
India has the highest retail prices of petrol and diesel among South Asian nations as taxes account for half of the pump rates.
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