Centre cuts fuel excise duty by Rs 10, retail prices to remain unchanged

New Delhi, March 28: The central government has cut excise duty on petrol and diesel by Rs 10 per litre each, but retail prices will remain unchanged as refiners offset the reduction against higher input costs.

The reduction averts an increase in petrol and diesel price that had become necessary in view of rise in international oil prices by about 50 per cent in the last one month.

The cut in special additional excise duty on petrol from Rs 13 to Rs 3 per litre and on diesel from Rs 10 to zero will not lead to any change in retail pump prices as the reduction will be offset against fuel losses – estimated by Petroleum Minister Hardeep Singh Puri at Rs 24 per litre for petrol and Rs 30 for diesel, and by his ministry at Rs 26 and Rs 81.90, respectively.

Alongside, the government imposed an export duty of Rs 21.50 per litre on diesel and Rs 29.50 per litre on aviation turbine fuel (ATF), reinstating a levy first introduced in July 2022 to curb windfall gains by refiners following Russia’s invasion of Ukraine and later withdrawn in December 2024.

However, unlike last time, there is no windfall tax that has been levied on domestically produced crude oil by firms like ONGC.

Prices of crude oil – the raw material for making petrol and diesel – have gone up from around USD 70 per barrel before the start of the conflict in the Middle East to over USD 100, said Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas.

“The government had two options – pass on the increase to consumers (by way of an increase in petrol and diesel prices) or take a hit (by cutting excise duty). The government chose the latter,” she told the press.

CBIC Chairman Vivek Chaturvedi said the windfall tax on exports will result in a gain of about Rs 1,500 crore in the first fortnight while the government will have to forgo over Rs 7,000 crore in revenue because of the excise duty cut.

Fuel prices in India have remained largely unchanged since April 2022 despite geopolitical shocks – from the Russia-Ukraine war to the Middle East crisis – that have driven sharp swings in global oil prices. The country depends on imports for 88 per cent of its crude oil needs.

In contrast, fuel prices have risen by 30-50 per cent across South and Southeast Asian countries, 30 per cent in North America, and 20 per cent in Europe since the onset of the current crisis.

PTI