The excise duty on petrol rises by ₹10 and on diesel by ₹13 starting May 6

  • The notification, however, clarified that the retail price will not rise and that would mean that the state-owned fuel retailers will have to bear the burden.
  • Many states have already hiked value-added tax on fuels this week.
  • The hike in duties on fuel will be effective from May 6.
  • Fuels like petrol and diesel do not come under the GST in India.
India's Central government has decided to hike the excise duty on petrol by ₹10, and on diesel by ₹13, with effect from Wednesday (May 6) to fill the gaping hole in the exchequer left by the COVID-19 pandemic.

However, the notification clarified that the retail price of fuels won't rise to avoid hurting the consumer. That would mean that state-owned fuel retailers like Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) will end up bearing the cost of additional duties and not be able to pass it on.

StockApril 30 to May 5
BPCL -6%

The hike in central excise a day after different states hiked the value-added tax (VAT) on auto fuel to fill up their own coffers. The hike in duty has taken away gains from the fall in global crude oil prices to shore up government revenue at a time when the coronavirus lockdown has brought the economy to a standstill.

Fuels like petrol and diesel do not come under the harmonised goods and services tax (GST) in India and therefore both the states and the Centre are free to increase or decrease levies.

For instance, the Delhi government has hiked local sales or value-added tax on petrol and diesel. VAT on petrol was increased to 30% from 27%, previously. In the case of diesel, VAT has been almost doubled to 30% from 16.75%.

Recently, Haryana too raised taxes on petrol and diesel by ₹1 and ₹1.1 per litre. Whereas, Tamil Nadu government hiked petrol prices by ₹3.25 litre and diesel by ₹2.50 litre.