New Delhi, January 17th
While the pandemic rocked tax levying across the board, the excise tax mop-up rose 48 percent in the current fiscal year, driven by a record hike in taxes on gasoline and diesel that more than made up for below-average fuel sales.
The collection of excise taxes stood at 1.96.342 billion rupees from April to November 2020, after 1.32.899 billion rupees in the same period of 2019, according to the Controller General of Accounts (CGA).
This is despite the fact that over 10 million tons less diesel – the most commonly used fuel in the country – was sold in the eight months.
According to the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Oil, diesel sales from April to November 2020 were 44.9 million tons, compared to 55.4 million tons in the previous year.
At 17.4 million tons, gasoline consumption was also lower than between April and November 2019 at 20.4 million tons.
While the goods and services tax (GST) has been in place for most products since their introduction in 2017, oil products and natural gas have been kept out of the preview. The consumption tax that goes to the center and the value added tax that goes to the state government are levied on their sales.
According to industry sources, the rise in excise taxes was mainly driven by record increases in taxes on gasoline and diesel in March and May last year.
The government had raised the excise tax on gasoline in two installments by 13 rupees per liter and on diesel by 16 rupees per liter in order to bring profits from international crude oil prices to a two-decade low.
This increased the total tax on petrol to 32.98 rupees per liter and on diesel to 31.83 rupees per liter.
Gasoline costs Rs 84.70 per liter in Delhi and a liter of diesel costs Rs 74.88.
For the full fiscal year 2019-20 (April 2019 to March 2020), the excise tax collection amounted to 2.39.599 billion rupees, according to the CGA.
The central consumption tax accounts for 39 percent of gasoline and 42.5 percent of diesel. After taking into account local sales tax or sales tax, the total tax burden in the price is approximately two thirds of the retail rate.
The excise tax on gasoline was Rs 9.48 per liter when the Modi government took office in 2014 and that on diesel was Rs 3.56 per liter.
The government increased excise taxes on gasoline and diesel nine times between November 2014 and January 2016 in order to take advantage of the global drop in oil prices.
Overall, the gasoline tax increased by 11.77 rupees per liter and the diesel tax increased by 13.47 rupees per liter over the 15 months, which helped the government’s excise tax rise from 99,000 rupees to 2.42,000 rupees in 2016-17 was more than doubled in 2014-15.
The government cut the excise tax by 2 rupees in October 2017 and by 1.50 rupees a year later. However, in July 2019 the excise tax was increased by 2 rupees per liter. In March 2020, the consumption tax was increased again by 3 rupees per liter. In May of this year the government increased the excise tax on gasoline by 10 rupees per liter and on diesel by 13 rupees per liter.
While the basic consumption tax on crude oil is not that high, it is 11% for ATF and 14% ad valorem (a certain percentage of the value) for compressed natural gas. With an ad valorem system, the result only occurs when the product price increases.
The government’s tax revenue fell 45.5 percent to Rs 688,430 from April to November, according to the CGA. For the entire 2020-21 financial year (April 2020 to March 2021), the government had estimated tax revenues of 16.35 billion rupees.
The corporate tax mop-up is down 35 percent to Rs 185,699 billion, and income tax collection is down 12 percent to Rs 235,038, the CGA data showed. – PTI