Union govt’s tax collection on fuel up by nearly 300% since 2014-15

Excise duty on petrol has gone up from Rs 9.48 per litre in 2014 to Rs 32.90 a litre presently.
Anurag Thakur
Anurag Thakur
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The Union government’s tax collection has gone up nearly 300% between 2014-15 and April-Jan 2021 on petrol, diesel and natural gas, according to an answer given by Union Minister of State for Finance Anurag Thakur in the Lok Sabha. In 2014-15, when the Narendra Modi government came to power for the first time, the excise duty collected by the Union government was Rs 29,279 crore on petrol. Between April 2020-Jan 2021, this was upto Rs 89,575 crore.

For diesel for the corresponding timelines, excise duty went from Rs 42,881 crore to Rs 2.04 lakh crore. For natural gas, it has come down from Rs 1,998 crore to Rs 919 crore.  The total collection was Rs 74,158 crore in 2014-15, and was up to Rs 2.95 lakh crore in April 2020-Jan 2021, up nearly four times. As a percentage of gross total revenue, it was 5.4% in 2014-15, and came in at 12.2% in April 2020-Jan 2021.

VCK Member of Parliament (MP) Thol Thirumavalavan from Tamil Nadu asked for details about tax collections on fuel.

This comes as fuel prices are at record highs across the country, and while the prices have held steady for three weeks, it has not reduced. Excise duty on petrol has gone up from Rs 9.48 per litre in 2014 to Rs 32.90 a litre presently. For diesel, this increase is from Rs 3.56 a litre to Rs 31.80. Central taxes currently make up the largest chunk of the cost of fuel. 

This comes after the excise duty on fuel was sharply hiked to mop up gains resulting from a fall in crude oil prices, but did not go down once the prices stabilised. 

Central excise duty rates on petrol and diesel as on March 1, 2020, were Rs 19.98 and Rs 15.83 per litre respectively. As on March 1, 2021, it was up to Rs 32.90 and Rs. 31.80 per litre for petrol and diesel.

Between November 2014 and January 2016, duty on petrol was hiked by Rs 11.77 per litre and that on diesel by Rs 13.47 a litre in nine hikes. While the excise duty was cut by Rs 2 once in 2017 and Rs 1.50 in 2018, it was raised by Rs 2 in 2019.

This comes as the Union government is pushing for petrol and diesel to be brought under GST. As things currently stand, the central government levies excise duty on them while state governments charge VAT. These taxes, with excise duty, in particular, have been raised periodically. When the GST was brought in — crude oil, natural gas, petrol, diesel, and aviation turbine fuel (ATF), were kept out of its purview given the revenue dependence of the central and state governments on this sector. While the Union government is supposed to pay GST compensation to states, states have had to borrow the shortfall due to reduced collections. If this is brought under GST, it further reduces avenues open to states that they can earn from directly.

In the 2021 Union Budget, the government added an agri-infra cess on petrol and diesel at Rs 2.5 and Rs 4 respectively and simultaneously reduced the excise duty by the same amount so it would not affect the consumer. However, this too takes money away from states as money collected from the cess goes to the Union government, whereas central excise goes to the Consolidated Fund of India, and are then divided between the Union government and the states based on the formula devised by the Finance Commission.

Last month, Oil Minister Dharmendra Pradhan had told the Parliament that the government had ruled out any cut in excise duty to give relief to consumers.

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