Excise hike on diesel offsets duty cut on petrol

The Government’s latest move on diesel and petrol seems to aim at two birds with one stone. One, the hike in diesel price by Rs 5 a litre (excluding VAT) and reduction in excise duty on petrol by Rs 5.30 a litre helps the public sector oil marketing companies moderate their under-recoveries. At the same time, the Government does not suffer loss of revenue due to the excise duty cut on petrol. This is because this loss will be compensated by the hike in excise duty on diesel. Of the Rs 5 a litre hike in diesel price, Rs 1.50 pertains to an increase in excise duty. With consumption of diesel in the country running far ahead than petrol, the Government would have ring-fenced or even bettered its income.

Source: The Hindu Business line