At a time when petrol prices in several cities have surpassed the Rs 100 mark, data from the Ministry of Petroleum shows that the petroleum sector's contribution to the central exchequer in the form of excise duty has increased by 125 per cent from Rs 99,068 crore in 2014-15 to Rs 223,057 crore in 2019-20.
It further went up to Rs 235,811 crore during the first nine months of 2020-21.
Fuel price includes various components like freight charges, dealer commission, central excise duty and value added tax (VAT).
Thus, it has become one of the highest taxed commodities in India. In the case of Delhi, state and central taxes account for approximately 58 per cent of petrol and 52 per cent of diesel prices.
A major reason for the rise in fuel prices is owing to the higher excise duty that increased two-fold from a mere Rs 9.48 a litre in April 2014 before Narendra Modi took charge, to Rs 32.90 a litre now on petrol.
Similarly, the excise duty on diesel increased almost eight-fold from Rs 3.56 a litre in April 2014 to Rs 31.8 a litre now.
This includes a massive hike of Rs 13 and Rs 16 per litre on petrol and diesel between March 2020 and May 2020, to get to the profit line in international prices owing to a pandemic-driven demand drop.
Prices for Indian Basket Crude oil fell to a historic low of $19.9 per barrel in April of last year.
On May 26, 2014, when the BJP government took charge, petrol in Delhi was Rs 71.41 a litre and diesel was Rs 56.71 a litre. Since then, on June 8, 2021, petrol had gone up by 33 per cent at Rs 95.31 a litre and diesel by 52 per cent at Rs 86.22 a litre.
This is despite a decline in Brent crude oil prices by 35 per cent from $110 a barrel on May 26, 2014 to $70.98 a barrel at one point on June 8, 2021. Brent crude prices have risen 36 percent this year.
Prices of petrol and diesel are revised on a daily basis, based on a 15-day average of the international price of the concerned product and foreign exchange rates.
A similar increase was in value added tax (VAT) and sales tax on petroleum, oil and lubricant products. It increased 46 per cent from Rs 137,157 crore in 2014-15 to Rs 200,493 crore in 2019-20.
During the first nine months of the financial year 2020-21, it was seen at Rs 135,693 crore.
Depending on the incidence of local taxes, fuel prices differ from state to state. Rajasthan is the state that levies the highest VAT on petrol in India.
With petrol prices in several cities exceeding Rs 100, the government is under increasing pressure to reduce taxes.
For the current financial year, the government has budgeted Rs 335,000 crore on excise revenue, a more than 25 per cent rise compared to 2020-21. This would mean that the Centre may hesitate to cut taxes as it is a major revenue earner.
Following the second COVID wave and the economy being affected badly, the central government may not immediately cut taxes at the moment.
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