69 percent! India now have highest tax in the world on petrol-diesel

The central government has hiked taxes on petrol and diesel. Excise duty on petrol has been hiked by Rs 10 per litre and diesel by Rs 13. With this, the tax on petrol-diesel, which is now pumped, has gone up to 69 per cent, the highest in the world.

Apart from India, only France, Germany, Italy, and the UK have more than 60 percent of the fuel tax. The government has hiked excise duty on diesel by Rs 13 per litre and petrol by Rs 10 per litre on Tuesday night.

A notification was issued on Tuesday night stating that road and infra cess on both diesel and petrol has been increased to Rs 8 per litre. In addition, an additional excise of Rs 5 litre on diesel and an additional excise tax of Rs 2/litre on petrol have been levied. This is the biggest tax lead in A Day on Fuel in India.

The Delhi government has also hiked VAT on diesel by Rs 7.1 per litre and petrol by Rs 1.6 a litre. Now, the petrol that is selling at Rs 71.26 a litre in Delhi is paying a tax of Rs 49.42 and Rs 48.09 on diesel sold at Rs 69.39 a litre. So much tax is not in any country in the world.

In France and Germany, the tax on retail fuel costs is 63 per cent, Italy 64 per cent, the UK 62 per cent, Spain 53 per cent, Japan 47 per cent, Canada 33 per cent and the US 19 per cent. Till last year, taxes on diesel and petrol were up to 50 per cent in India as well.

What the government said

However, the government has said that the increase in Exide duty will not affect customers as crude oil prices are very low this year and hence the rates will not be increased.

This year, the Indian basket crude rate has been down by about 64 per cent. Indian basket crude was up $65.5 a barrel in December 2019, but on Monday it fell to just $23.38 a barrel. In April it had reached $19.9 a barrel.

Despite the steep fall in crude oil prices, there is no decline in retail prices of petrol and diesel. Petrol price in Delhi remained at Rs 69.87 and diesel at Rs 62.58 a litre in the last full month.

Tax recourse to fill the treasury

In fact, both the centre and the state governments are resorting to levying tax on oil to compensate for their coffers. The central government had earlier hiked the tax on petrol and diesel by Rs 3 a litre in March itself, once again raising it and taking advantage of the reduced price of crude oil.