Ahead of the Budget, government today hiked the excise duty on petrol by Re 1 per litre and Rs 1.50 on diesel, the third increase this month, to mop up over Rs 3,200 crore in additional revenue, netting in all Rs 17,000 crore in three months.
The hike will not result in any increase in retail selling price of the two fuels as it would adjust against the reduction in rates that may have been possible because of the slide in international oil prices.
Basic excise duty on unbranded or normal petrol has been increased from Rs 8.48 per litre to Rs 9.48 and the same on unbranded diesel from Rs 9.83 to Rs 11.33, a notification of the Central Board of Excise and Customs (CBEC) said.
The increase in excise duty will fetch the government over Rs 3,200 crore during the remainder period of the fiscal.
This is the third hike in excise duty this month as the government made use of the slump in oil prices to shore up resources at a time when its disinvestment kitty is likely to fall way short of target.
The government had on January 16 hiked the excise duty on petrol by Rs 0.75 per litre and Rs 2 on diesel to mop up over Rs 3,700 crore in additional revenue.
Prior to that the government on January 2 had hiked the excise duty on petrol by Rs 0.37 per litre and Rs 2 on diesel to mop up a little less than Rs 4,400 crore.
The three hikes in excise duty this month takes to five the number of times tax rates on the two fuel have been raised this fiscal.
On December 17, excise duty on petrol was hiked by Rs 0.30 per litre and Rs 1.17 a litre on diesel to garner Rs 2,500 crore.
Previously on November 7, excise duty on petrol was raised by Rs 1.60 per litre and diesel by 30 paise to raise Rs 3,200 crore.
With the five increases, the government is expected to mop up over Rs 17,000 crore to meet its budgetary deficit.
Prior to these, the government had in four instalments raised the excise duty on petrol and diesel between November 2014 and January 2015 to lessen the reduction in retail rates, which followed falling international oil rates.
The four excise duty hikes during this period totalled Rs 7.75 per litre on petrol and Rs 6.50 a litre on diesel. It led to about Rs 20,000 crore in additional revenue to the government, helping it meet the fiscal deficit target.
If the government would not have raised these duties, consumer price of petrol and diesel should have been lower by 11.77 a litre and Rs 13.30 per litre, respectively.
Petrol currently costs Rs 59.99 per litre in Delhi while diesel costs Rs 44.71 a litre.
After including additional and special excise duty, the total levy on unbranded petrol will be Rs 21.48 per litre, as against Rs 20.73, currently.
Similarly, on unbranded or normal diesel, total excise duty after including special excise will be Rs 17.16 per litre compared with the Rs 15.66 now.
The basic excise duty on branded petrol has been raised from Rs 9.66 per litre to Rs 10.66 and the same on branded diesel from Rs 12.19 to Rs 13.69 per litre, the CBEC notification said.
The government had collected Rs 99,184 crore in excise collections from the petroleum sector in 2014-15, which stood at Rs 33,042 crore in the first quarter of the current fiscal.