Government Increases Excise Duty on Petrol and Diesel by ₹2 per Litre, Retail Prices to Remain Unchanged
NEW DELHI, Apr 7: In a strategic fiscal move, the Government of India on Monday announced an increase of ₹2 per litre in the excise duty levied on both petrol and diesel. Despite the hike, consumers will not face any increase in retail fuel prices, as the higher duty will be balanced by a corresponding reduction that had become viable due to falling international crude oil prices.
As per the official notification, the excise duty on petrol has been revised to ₹13 per litre, while that on diesel now stands at ₹10 per litre. This revision will come into effect starting April 8, 2025.
Typically, changes in excise duty are passed on directly to consumers at the pump. However, in this instance, the government has chosen to neutralize the increase against the price relief that would have been passed on, owing to the sharp decline in global oil rates. The move is designed to enhance government revenue without burdening the public at a time of economic volatility in global markets.
Global oil prices have recently plunged to their lowest levels since April 2021, triggered by rising trade tensions between the United States and China, which have stoked concerns over a potential global recession. On Monday, Brent crude futures fell by $2.43 (3.7%) to $63.15 per barrel, while US West Texas Intermediate (WTI) crude dropped by $2.42 (3.9%) to $59.57 per barrel.
Given that India imports nearly 85% of its crude oil requirements, such international price fluctuations play a significant role in shaping domestic fuel pricing and taxation policy. The government has often leveraged periods of low global oil prices to adjust excise structures in a bid to improve fiscal strength.
Confirming the development, the Ministry of Petroleum and Natural Gas stated via a post on social media platform X, “PSU Oil Marketing Companies have informed that there will be no increase in retail prices of #Petrol and #Diesel, subsequent to the increase effected in Excise Duty Rates today.”
The Modi government during its 11-year rule hiked excise duty whenever international oil prices fell.
The government had between November 2014 and January 2016, raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.
In all, duty on petrol rate was hiked Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped government’s excise mop-up more than double to Rs 2,42,000 crore in 2016-17, from Rs 99,000 crore in 2014-15.
The government had cut excise duty by Rs 2 in October 2017, and by Rs 1.50 a year later. But it raised excise duty by Rs 2 per litre in July 2019. It again raised excise duty on March 2020, by Rs 3 per litre each.
Excise duty was raised by Rs 13 and Rs 16 per litre on petrol and diesel between March 2020 and May 2020.
But in the following years, it rolled back the Rs 13 and Rs 16 per litre excise duty hike as international oil prices soared. This helped bring down petrol prices from a record hike of Rs Rs 105.41 a litre in Delhi and highest ever diesel rate of Rs 96.67.
Just before general elections were announced last year, the government had cut petrol and diesel prices by Rs 2 a litre each.
Petrol currently costs Rs 94.77 a lire in Delhi and Rs 87.67 is the price for a litre of diesel. This policy approach reflects a continuation of the government’s pattern of utilizing excise duty as a tool for revenue management, particularly during times when international oil prices dip significantly.
