The price hike will be absorbed by Oil Marketing Companies and there will be no effect retail sale price of petrol and diesel.
On Tuesday evening, the Central government increased the excise duty on petrol by Rs. 10 and on diesel by Rs. 13 per litre to recover some of the loss of income sustained by the government due to the national lockdown.
An official notification said that the change in duties will come into effect from 6 May.
However, the changes in the excise duty will not affect the retail sale price of petrol and diesel.
The income from these duties shall be used for infrastructure and other developmental items of expenditure, a central government official said.
A Re 1 per litre hike in excise duty on petrol and diesel normally means an additional Rs 14,500 crore in annual revenue to the Centre. But the revenue will accumulate only when demand for the fuel, decreased due to the national lockdown, increases considerably.
The Central government’s step following Delhi’s ruling- Aam Aadmi Party government’s move to increase value-added tax (VAT) on petrol and diesel to accumulate money to combat the novel coronavirus outbreak.
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This decision had increased the price of petrol by Rs 1.67 per litre to Rs 71.26 and diesel, by Rs 7.10 to Rs 69.39.
AAP’s move was sharply criticised by the Bharatiya Janata Party and the Congress in Delhi. Outside of politics, there has been some acknowledgement that this might be the only way for states that are running out of money to pay employees salaries.
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