NEW DELHI: Just as consumers were looking for some relief from record fuel prices, the 2020-21 budget proposed on Monday a tax on agricultural infrastructure development of Rs 2.50 and Rs 4 per liter for gasoline and respectively Diesel.
Pump prices will not rise, however, as the effects of agriculture have been offset by the even lowering of the basic excise duty and the special additional excise duties on the fuels.
The end result is that the central tax amount remains unchanged at Rs 32.90 for a liter of gasoline and Rs 31.80 for diesel. These figures represent 38% of the 86.30 rupees per liter that consumers in Delhi pay for a liter of gasoline and 41.6% of the 76.48 rupees charged for a liter of diesel.
Oil Minister Dharmendra Pradhan said the tax adjustment will allow the oil sector to contribute 50,000 rupees annually to creating agricultural infrastructures such as warehousing and cold storage in order to boost the rural economy and improve farmer welfare.
The plan behind the tax optimization is to keep a total of Rs 6.50 out of the excise duties that flow from every liter of gasoline and diesel sold, as the levy is not shared with states under the decentralization scheme.
In order to save consumers an additional burden, the basic excise duty on unbranded petrol has been reduced from Rs 2.98 to Rs 1.40 and the special additional excise duty from Rs 12 to Rs 11 per liter. Likewise, diesel taxes have been cut from Rs 4.80 to Rs 1.80 and Rs 8 per liter from Rs 9.
Similar tariff changes have also been made for branded gasoline and diesel and fuels mixed with ethanol.
Central taxes are calculated as a fixed amount and do not vary according to the increase in the base price of fuel. Together with the value added tax levied by the states, the total taxes are 61% of the current gasoline price and 43% of the diesel price in Delhi, exacerbating the effects of the hardening of crude oil prices.
This means that consumers remain exposed to global oil markets.
Rs 2.98 per liter and on diesel from Rs 4.83 per liter to Rs 1.8 per liter.