The special additional excise duty will increase government's gross revenue collections from petroleum products, which ultimately helps Centre to keep fiscal deficit in check and fund expenditure.
Finance Minister Nirmala Sitharaman said on July 05 that the government would levy a additional excise duty, and a road and infrastructure cess, each of Re 1 per litre, on petrol and diesel.
During her maiden Budget speech in parliament, Sitharaman said, "I propose to increase special additional excise duty and road and infrastructure cess each one by Rs 1 a litre on petrol and diesel."
The special additional excise duty will increase government's gross revenue collection from petroleum products, which ultimately helps Centre to fund expenditure and keep fiscal deficit in check.
The fiscal deficit was pegged at 3.3 percent of GDP for 2019-20. This was down from the 3.4 percent target set at the Interim Budget presented on February 1, 2019.
Sitharaman raised excise duty and road and infrastructure cess on the auto fuels to raise over Rs 28,000 crore.
Post considering local sales tax or value added tax (VAT), which is charged after adding central excise duty on base price, the increase in petrol price would be over Rs 2.5 per litre and that on diesel would be Rs 2.3.
On Friday, a litre of petrol costs Rs 70.51 in Delhi and Rs 76.15 in Mumbai. Diesel is priced at Rs 64.33 a litre in Delhi and Rs 67.40 per litre in Mumbai.
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