No change in petrol, diesel prices despite excise duty cut

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The Union Budget 2018-2019 has cut basic excise duty on petrol and diesel by Rs 2 per litre but the move will not result in reduction in fuel prices for consumers.

According to the budget documents analysed by ETEnergyWorld, the government has introduced a Rs 8 per litre levy of Road and Infrastructure Cess on petrol and diesel but abolished the additional duty of Excise (Road cess) on motor spirit by Rs 6 per litre at the same time - a net impact of Rs 2 per liter addition on the levy of tax on petrol and diesel.

Petrol was priced at Rs 73.10 per litre and diesel is priced at 64.11 per litre in the national capital on Friday. In wake of the rallying crude oil price, the Oil Ministry had demanded excise duty cut from the Finance Ministry.

Excise duty on unbranded petrol was reduced to Rs 4.48 per litre from Rs 6.48 per litre earlier.

The fuel prices, which are revised on daily basis, have constantly been rising since December 1.

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A day after the Budget, petrol prices increased marginally in four metro cities. Practically, there is no impact on the final price of petrol and diesel. It will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. Centre had steadily increased excise duty on petrol and diesel when the global crude prices had plummeted below $30 a barrel. That is the only change we have made.

The much-awaited Union Budget 2018 has hiked petrol price, and the diesel price has remained unchanged.

Finance Minister Arun Jaitley had recently said that the Central government favours bringing petrol products under the GST umbrella, but is looking for consensus with state governments to do the same.

"FY19 budgeted excise collections from auto fuels seem to build in no cut in excise duties during the year despite high crude prices".

Small businesses, which have traditionally formed the core support base of the BJP, may get some sops to ease pain caused to them due to chaotic rollout of the Goods & Services Tax (GST) and demonetisation.

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