Revenue Secretary Malhotra sees no reason to cut excise on fuel, given global crude prices

The interim Budget has estimated that excise collections for 2024-25 at Rs 3.19 lakh crore, only 5 percent higher than the revised estimate for the current financial year.

The government has "no reason" to reduce the excise duty on petrol and diesel at the moment, Revenue Secretary Sanjay Malhotra has said.

"Given the rates of crude that are existing, there is no reason (to cut the excise duty on petrol and diesel," Malhotra told Moneycontrol in an interview over the weekend.

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The average price of India's crude oil basket so far in February has been $81.04 per barrel, up from $79.22 per barrel in January, as per data from the government's Petroleum Planning & Analysis Cell. The most active March 2024 crude oil futures contract on the New York Mercantile Exchange closed at $72.41 per barrel on February 2.

According to Malhotra, the current excise duty on petrol and diesel is the lowest in the last 4-5 years.

At present, the effective central excise duty on one litre of diesel is Rs 15.80, while its Rs 19.90 per litre of petrol.

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"And we have not had these rates for a very, very long time. The lowest in the last seven years is not much below the rates that are there today," Malhotra added.

When asked whether it will fall on oil marketing companies to reduce pump prices, Malhotra refused to comment.

Domestic fuel prices have been largely unchanged since June 2022.

The interim budget has estimated that excise collections for 2024-25 at Rs 3.19 lakh crore, only 5 percent higher than the revised estimate for the current financial year.

As for the windfall gains tax on fuel products, the revenue secretary said there is currently no proposal in the government to withdraw it. "We review it every 15 days and we continue to do that."

The government imposed a windfall tax on crude oil producers in July 2022. On February 3, the tax on petroleum oil was raised to Rs 3,200 per tonne from Rs 1,700 per tonne. However, the tax on diesel and aviation turbine fuel was kept at zero.