The recent hike in excise duty, the highest taxes on petrol and diesel are being levied. The country is now being charged slightly over 69 per cent as taxes on both petrol and diesel.
India has become the country with the highest taxes on fuel due to the recent excise duty hike of Rs. 13 per litre on diesel and Rs 10 per litre on petrol.
While the government first issued a notification on Monday night to increase road cess on petrol and diesel by Rs 8 per litre, additional excise duty was also hiked by Rs 2 per litre on petrol and Rs 5 per litre on diesel.
A report said that this is the steepest hike in excise duties on fuel in the country. The report added that the decision came on the same day when the Delhi government had hiked value-added tax (VAT) on the two fuels.
The report highlighted that the price of one litre of petrol in Delhi, currently retailing at Rs 71.26, includes taxes worth Rs 49.42. Meanwhile, diesel which retails at Rs 69.39 per litre has Rs 48.09 in taxes.
The excise duty on both petrol and diesel stand slightly above 69 per cent after the fresh hike.
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However, India has always charged high taxes on petrol and diesel. By last year, the government was charging 50 per cent taxes on the retail price of fuel.
While an increase in excise duty does not directly impact retail prices, it does lead to an indirect increase if OMCs decide to increase fuel prices. The dynamic pricing mechanism allows them to revise prices daily.
The opposition is questioning the government’s move to increase in excise duty. This increase comes when global oil prices have crashed to historic lows.
The government’s seems to be focusing on generating more revenue from taxes to mitigate the below par economic crisis from the Covid-19 impact.
It is worth pointing out that both Central and state governments are exploring all alternatives to generate more tax revenue in the wake of the exceptional disruptions caused by the novel coronavirus.
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