Coronavirus Pandemic: Government To Increase Excise Duty on Petrol, Diesel To Increase By Up To ₹ 8 Per Litre

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The Finance Ministry has decided to raise special additional excise duty on petrol and diesel by up to Rs. 8 per litre by making some amendments in the Finance Bill 2020. This hike will help the government fight the Coronavirus.

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The total central excise duty on petrol & diesel stands at Rs. 22.98/litre and Rs 18.83/litre


  • Excise duty on petrol & diesel to be hiked by up to Rs. 8 per litre
  • Excise duty on petrol to increase to Rs. 18 per litre
  • Excise duty on petrol to increase to Rs. 12 per litre

As the novel Coronavirus Pandemic gets worse day-by-day, the government has decided to mobilise additional resources that would be necessary for fighting the deadly disease. The Finance Ministry has decided to make some amendments to the Finance Bill 2020, wherein the government will be raising special additional excise duty on petrol and diesel by up to ₹ 8 per litre. Making amendments to the eighth schedule of the Finance Act 2002, the government has proposed a hike on petrol prices by to ₹ 18 per litre from ₹ 10 per litre whereas the duty on diesel will go up from ₹ 4 per litre to ₹ 12 per litre. However, it's not yet clear if the government will be using the ₹ 8 per litre hike as a cap to raise duties to that level or would be notifying the increase in one go. By imposing the new excise duty, the retail price and diesel may increase by ₹ 5 to ₹ 6 per litre whereas the remaining will be borne by the public sector oil market firms that have been reducing the prices for the petroleum products on daily basis, which is in-line with the falling global oil prices.

Also Read: Coronavirus Pandemic: BMW India Shuts Down Chennai Plant; Showrooms To Remain Closed

Notably, the ₹ 8 per litre hike would be a great move for the government as it would increase its annual excise collection from the sector to ₹ 1,20,000 crore. The increase in petroleum products along with saving over $15-20 billion in oil import bill in the financial year 2021 will ensure enough boost to bring the economy back on the track after novel Corona pandemic. It is also important to note that any such increase in petrol and diesel retail prices could harm the economy, which is already facing a slowdown. Additionally, the price hike on petrol and diesel will also multiple effects resulting in an increase of several essential products as well as services that would impact on the inflation.


Finance Ministry has proposed to increased excise duty on petrol and diesel by up to ₹ 8 per litre

Previously, the government raised the excise duty on the two petroleum products on March 14 by ₹ 3 per litre, which is the highest in the last five years, taking advantage of the low global oil prices. This increase could help the centre to gain revenue of up to ₹ 45,000 for the entire year. However, it saved consumers from any immediate rise in the retail cost of the two auto fuels that may be altered later keeping any increase to the minimum. Petrol prices fell 13 paise per litre to ₹ 69.87 a litre and diesel by 16 paise to ₹ 62.58 in Delhi on Saturday.

According to the notification issued by Central Board of Indirect Taxes and Customs, the special duty on petrol and diesel was increased to ₹ 10 per litre and ₹ 4 per litre respectively. Furthermore, the road and infrastructure cess on petrol and diesel has been hiked by ₹ 1 per litre to ₹ 10 per litre, effectively increasing the central duty on petrol and diesel to Rs 3 per litre. The new rates came into effect from March 14. This increase in excise duty of ₹ 8 per litre will be the highest in the two tenures of the NDA government.


Currently, the total central excise duty on petrol and diesel stands at ₹ 22.98 per litre and Rs 18.83 per litre respectively. With a hike of ₹ 8 per litre, these prices would go up substantially to ₹ 30.98 per litre for petrol and ₹ 26.83 per litre for diesel. Apart from this, the states also impose VAT on these two products.

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