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CHENNAI: The Center for Car Fuels’ massive excise tax increases earned it around Rs.1.8 billion in additional revenue of around Rs.1.8 billion in the last fiscal year 2020-21, according to calculations based on fuel consumption data from the Union’s Ministry of Oil.
The estimated total consumption tax collections for gasoline and diesel are Rs.3.9 billion, an increase of 77% over the previous year’s value of Rs.2.2 billion.
This impacted lockdowns enforced to contain the pandemic, even if total gasoline and diesel consumption fell 10.6% over the year.
The additional revenue comes from excise tax increases the center implemented between March and May 2020 to take advantage of the record drop in crude oil prices over the summer.
The increases (13 rupees per liter for gasoline and 16 rupees per liter for diesel) have helped offset the decline in other tax revenue sources, but at the expense of high retail fuel prices.
The central excise taxes are currently 32.9 rupees for a liter of gasoline and 31.8 rupees for a liter of diesel. Combined with value added taxes (VAT), which vary from state to state, Indians are some of the most taxed fuel consumers in the world. In Chennai, gasoline was sold at 95.51 rupees per liter on Saturday, with central tariffs accounting for 34 percent of the retail price and state sales tax (22.84 rupees / liter) an additional 24 percent. Diesel, taxed at a similar level, was priced at 89.39 rupees per liter.
In contrast to fuel retail prices, which have risen steadily by 32% for gasoline and 36% for diesel between March 16, 2020 (when the first increases were introduced), crude oil prices fell from $ 68 in January 2020 to a low in April 2020 from below USD 20 before slowly returning to January levels in December 2020. Brent crude is currently trading at $ 68-70 a barrel.
As for the treasury, the increase in excise taxes and the decline in other sources of tax revenue during the pandemic have accelerated the trend, while dependence on fuel taxes has been increasing steadily for several years.
Central consumption taxes on petroleum products accounted for almost a fifth of India’s gross tax revenue of Rs 20 billion in FY21. In fiscal year 20 this figure was 11%; in the 2015 financial year it was 8%.
The most recent update of the Petroleum Planning and Analysis Cell (PPAC) of the Union’s Petroleum Ministry shows that states had levied sales tax and value-added tax of Rs 1.3 billion on petroleum products in the nine months to December 2020.
However, state sales tax rates vary between states, and gasoline prices have surpassed 100 rupees per liter in several locations in high sales tax states such as Rajasthan, Maharashtra, and Madhya Pradesh. On Saturday, gasoline prices in Mumbai exceeded 100 rupees per liter.
Large tariff cuts unlikely
Aside from the political consequences of high taxes, the government also has to deal with the inflationary pressures exerted by high fuel rates. However, economists note that excise taxes are unlikely to see any significant cut this fiscal year.
“It is very unlikely that they do not have the (tax) space,” said Madan Sabnavis, chief economist at Care Ratings. That, of course, means your GST collections will fall. ”
PETROL RATE CROSS `100 / LITER IN MUMBAI
Gasoline and diesel prices continued to rise on Saturday, with oil marketing companies increasing gasoline prices by 26 pa per liter and diesel prices by 28 pa per liter.
The hikes, the fifteenth this month, resulted in record highs in fuel prices in many places.
In the financial capital Mumbai, gasoline now costs Rs 100.19 per liter and diesel Rs 92.17 per liter