The government on Monday increased the excise duty on petrol and diesel by Rs 2 per litre each amid a sharp fall in global oil prices. However, there will be no change in retail prices for the general public.
The excise duty on petrol was hiked to Rs 13 per litre and that on diesel to Rs 10 a litre. According to the latest notification by the Department of Revenue, Ministry of Finance, the change will come into force on 8th April, 2025.
There will be no burden on the common man as the increase will be adjusted against the price cut that was warranted because of falling international oil prices.
Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, said "Even if crude prices go up to $65, OMCs will have the headroom for price moderation for a downward revision."
The Ministry of Petroleum and Natural Gas has informed the PSU Oil Marketing Companies (OMCs) that there will be no increase in retail prices of petrol and diesel.
International oil prices have slumped to their lowest since April 2021 as escalating trade tensions between the United States and China stoked fears of a recession that could cut oil demand.
Brent futures lost USD 2.43, or 3.7 percent, to USD 63.15 a barrel on Monday while US West Texas Intermediate crude futures were down USD 2.42, or 3.9 percent, at USD 59.57.
Harshraj Aggarwal, Executive vice president, Yes Securities, noted that the excise duty hike on petrol and diesel was on our expected lines given crude correction. The marketing margins which had crossed Rs10/ltr gave the government some confidence on this decision.
"The LPG burden would also come down on current crude price levels. At these crude prices there would inventory losses on both refining and marketing for the OMCs. We still believe that if there are any positive changes on tariff revisions, the crude prices will pull back from current levels and reduce the marketing margins further, we continue to build-in a Rs 3/ltr marketing margins in our estimates," he added.
The government in December 2024 also scrapped the old windfall profit tax on domestically-produced crude oil and on export of jet fuel (ATF), diesel and petrol following a decline in international oil prices.
India first imposed windfall profit taxes on July 1, 2022 joining a growing number of nations that tax super normal profits of energy companies.
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