Lok Sabha Question No. 682 (UNSTARRED), answered on 2016-11-18
Subject: High Taxes on Petroleum Products
Ministry: FINANCE
Asked by: SHASHI THAROOR

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

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## LOK SABHA

## UNSTARRED QUESTION NO.682

## TO BE ANSWERED ON FRIDAY THE 18 TH   NOVEMBER, 2016 KARTIKA 27 , 1938 (SAKA)

## HIGH TAXES ON PETROLEUM PRODUCTS

## 682. DR. SHASHI THAROOR:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Government  is  aware  of  the  high  taxes  on  petroleum  products  including petrol and diesel;
- (b) if so, the details thereof along with the comparative increase in the taxes on petrol and diesel during the last three years and the current year;
- (c) whether the high taxes have undermined the benefit of the falling global prices of oil to the consumers, if so, the details thereof; and
- (d) the steps taken/being taken by the Government to pass on the benefits of lowered global oil  prices  to  the  consumers  by  reducing  the  high  taxes  on  petroleum  products  thereby boosting domestic consumption and benefitting the economy?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI SANTOSH KUMAR GANGWAR)

- (a)  & (b): The present cumulative Central Excise duties on unbranded petrol and diesel are as under:

| Petrol   | Rs.21.48 per litre [Rs.9.48 BED + Rs.6 SAED + Rs.6AED]   |
|----------|----------------------------------------------------------|
| Diesel   | Rs.17.33 per litre [Rs.11.33 BED + Rs.6 AED]             |

BED - Basic Excise Duty [levied under the Central Excise Tariff Act]

SAED - Special Additional Excise Duty [levied under section 147 of the Finance Act, 2002]

AED - Additional Excise Duty [levied under section 111 of the Finance (No.2) Act, 1998 Petrol and section 133 of the Finance Act, 1999 - Diesel]

Changes made in the Basic Excise Duty (BED) on petrol and diesel (both   branded and unbranded) during the last 3 years, are as under:

| Petroleum product              | Petrol    | Petrol   | Diesel     | Diesel   |
|--------------------------------|-----------|----------|------------|----------|
| Notification                   | Unbranded | Branded  | Unbrand ed | Branded  |
| No.12/2014-CE dated 11.07.2014 | -         | (-5.15)  | -          | -        |
| No.22/2014-CE dated 12.11.2014 | 1.50      | 1.50     | 1.50       | 1.50     |

| No.24/2014-CE 02.12.2014   | dated   | 2.25    | 2.25    | 1.00    | 1.00    |
|----------------------------|---------|---------|---------|---------|---------|
| No.1/2015-CE 01.01.2015    | dated   | 2.00    | 2.00    | 2.00    | 2.00    |
| No.3/2015-CE 16.01.2015    | dated   | 2.00    | 2.00    | 2.00    | 2.00    |
| No.12/2015-CE 01.03.2015   | dated   | (-3.49) | (-3.46) | (-3.70) | (-3.63) |
| No.43/2015-CE 06.11.2015   | dated   | 1.60    | 1.60    | 0.40    | 0.40    |
| No.46/2015-CE 16.12.2015   | dated   | 0.30    | 0.30    | 1.17    | 1.17    |
| No.1/2016-CE 01.01.2016    | dated   | 0.37    | 0.37    | 2.00    | 2.00    |
| No.2/2016-CE 15.01.2016    | dated   | 0.75    | 0.75    | 2.00    | 2.00    |
| No.4/2016-CE 30.01.2015    | dated   | 1.00    | 1.00    | 1.50    | 1.50    |

Note: In Budget 2015-16, the following changes were effected:

- (i) The  effective  rate  of  additional  duty  of  excise  (AED),  commonly  known  as  Road Cess, was increased from Rs.2 per litre to Rs.6 per litre on both petrol and diesel while simultaneously reducing the BED by Rs.4 per litre.
- (ii)  Education  Cess  and  Secondary  and  Higher  Education  Cess  levied  on  excisable goods, including petrol and diesel, were exempted. On this count, BED on petrol and diesel were suitably revised.

(c): Continued fall in international prices of crude, petrol and diesel, and the consequent over recovery  on  petrol  and  diesel  by  Oil  Marketing  Companies  (OMCs)  was  partly  utilized  to increase excise duty on petrol and diesel:

- a. to recoup the loss on account of reduction made in basic customs duty and excise duty rates on crude and petrol / diesel in June, 2011, with accompanying revenue loss to protect the consumers from rising crude, petrol and diesel prices,
- b. and to garner resources for infrastructure like roads.

This measure will also augment the overall Tax: GDP ratio. Further, part of the benefit of reduction in international prices of crude has been passed on to the consumers in form of a downward revision [since November, 2014] in the Retail Sale Prices of Petrol and Diesel.

(d): There is no such proposal under consideration at present.

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