On April 7, the Government of India increased the excise duty on both petrol and diesel by Rs 2 per litre. However, this increase will not affect retail prices at petrol pumps for Indian consumers.
According to the latest notification from the Department of Revenue, the new excise rates will be effective from April 8, 2025. The excise duty on petrol now stands at Rs 13 per litre, while on diesel it has been raised to Rs 10 per litre.
Despite the tax hike, the government clarified that there will be no extra burden on the public. This is because international crude oil prices have recently fallen sharply, and the expected retail price reduction is now being adjusted against the new excise hike.
Union Petroleum Minister Hardeep Singh Puri indicated that even if oil prices go up to $65 a barrel, oil marketing companies will be able to make necessary adjustments in prices without affecting consumers.
International oil prices are currently at their lowest levels since April 2021. Brent crude has dropped $2.43 to $63.15 a barrel, and American WTI crude has dropped $2.42 to $59.57. The prices have dropped following rising tensions in trade between the US and China, leading to concerns over a slowdown in the global economy.
The move was anticipated, according to experts, given oil companies’ high marketing margins. With crude prices going down, the subsidy burden on LPG is also likely to decrease. But lower prices could cause inventory loss to the oil companies in both marketing as well as refining segments.
The government has previously lifted the windfall tax on crude oil, petrol, diesel, as well as on jet fuel in December 2024, considering a decline in international prices. The tax was imposed in July 2022 to raise additional revenues as global oil majors posted unusually high gains.
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Source: Moneycontrol.
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