Budget: No Rise in Retail Petrol, Diesel Prices Despite New Cess

Sitharaman announced that rates of BED and SAED on petrol and diesel are being reduced from the existing levels.

Finance Minister Nirmala Sitharaman announced that rates of basic excise duty and special additional excise duty on petrol and diesel are being reduced from the existing levels.

(Photo: Eshwar Gole/The Quint)

The government on Monday, 1 February, imposed agriculture and infrastructure development cess at the rate of Rs 2.5 per litre on petrol and Rs 4 per litre on diesel, to mobilise additional resources required in these two key segments of the economy.

However, to prevent the additional cess from impacting the retail price of the two petroleum products, which have already reached historically high levels across the country, Finance Minister Nirmala Sitharaman announced that rates of basic excise duty and special additional excise duty on petrol and diesel are being reduced from the existing levels.

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Speaking at the post-Budget press briefing, the FM clarified that the Agri Infra Cess will not result in a price increase for consumers, as the higher cess has been adjusted with lower customs duty.

Overall, while the agriculture and infrastructure cess will raise the level of taxation on the auto fuels, reduction in excise duty will make the taxation proposal in the Budget tax neutral, which will keep oil marketing companies away from raising the retail price of petrol and diesel based on the new imposition, IANS reported.

The rise in petrol and diesel has been on hold for the last five days, but before that it had risen 10 times in January, with the two auto fuels increasing by Rs 2.59 and Rs 2.61 per litre respectively this month.

In the Budget proposal, while agriculture and infrastructure development cess at the rate of Rs 2.5 per litre on petrol and Rs 4 per litre on diesel has been levied, the government has reduced basic excise duty (BED) on petrol from Rs 2.98 a litre to Rs 1.4 a litre and special additional excise duty (SAED) from Rs 12 a litre to Rs 11 a litre. Similarly, for diesel BED has been reduced from Rs 4.83 a litre to Rs 1.8 a litre and BAED from Rs 9 a litre to Rs 8 a litre.

Minor correction in retail prices even after this change is expected to be absorbed by oil marketing companies, keeping consumers from any further increase in petrol and diesel prices, reported IANS.

According to The Indian Express, a similar adjustment has been made for alcoholic beverages, which currently attract 150 per cent basic customs duty. This duty has now been slashed to 50 per cent, even as the Budget has proposed an AIDC of 100 per cent. Owing to this, there will be no price hike for the consumer, the report says.

(With inputs from IANS and The Indian Express.)