Govt’s excise collection on petroleum products jumps to over Rs 1.71 lakh crore

The official data show that the government’s revenue from the levy of excise duty on petroleum products increased by 33% in the first half of this fiscal year compared to the same period last year, and is 79% higher than pre-Covid levels. Excise duty collections increased to over Rs 1.71 lakh crore in April-September 2021, according to the data from the Controller General of Accounts (CGA).

This is up from Rs 1.28 lakh crore collected in the same period of the previous fiscal. The collection is 79% higher than the Rs 95,930 crore received in April-September 2019, news agency PTI reported.

This surge in excise duty collection has been noticed due to the steep rise in Central excise duty rates.

Excise revenue collection was Rs 3.89 lakh crore in the fiscal year 2020-21, compared to Rs 2.39 lakh crore in 2019-20, according to CGA data. Only petrol, diesel, aviation tribune fuel and natural gas are subject to excise duty since the implementation of the Goods and Services Tax (GST) regime.

The incremental collection of Rs 42,931 crore in the first six months of fiscal year 2021-22 is four times the government’s full-year liability of Rs 10,000 crore for repayment of oil bonds issued by the previous Congress-led UPA administration to subsidise petrol.

Revenue from petroleum products

The report quoted sources as saying that the bulk of excise tax revenue comes from the levy on gasoline and diesel, and with sales picking up as the economy improves, the current year’s incremental receipts might be over Rs 1 lakh crore higher than the previous year.

In total, the UPA government issued Rs 1.34 lakh crore in bonds to state-owned oil corporations to compensate them for selling fuels like cooking gas LPG, kerosene and diesel at below-cost prices. According to the finance ministry, Rs 10,000 crore is due to be reimbursed in the current fiscal year.

Steep hike in excise duty on petrol, diesel

Finance Minister Nirmala Sitharaman and then-Oil Minister Hardeep Singh Puri both blamed oil bonds for restricting budgetary capacity to provide relief to customers suffering from record-high fuel costs. The majority of excise revenue comes from petrol and diesel, on which the Central government imposed high tariffs last year.

Last year, excise duty on petrol was raised from Rs 19.98 to Rs 32.9 per litre to recoup gains from international oil prices plummeting to multi-year lows due to decreasing demand. The duty on diesel has been increased to Rs 31.80. The excise duty has remained the same despite the international prices rebounding to USD 85 per barrel. As a result, petrol prices have risen above Rs 100 per litre in all major cities and diesel prices have gone above Rs 100 per litre in more than a half-dozen states.

The overall increase in petrol prices now stands at Rs 37.38 per litre since the government decided to raise excise duty to record levels on May 5, 2020. During this time, diesel prices have risen by Rs 27.98 per litre.

Exorbitantly high taxes, regardless of global oil price swings, have driven the cost of petrol and diesel to new highs across the country in 2021. This has a direct impact on people’s monthly budget and they have to shell out more than before. People who don’t have their own vehicles will further spend more while travelling in public transportation.