Excise revenue from petrol and diesel doubles to Rs 3.7 lakh crore in FY21; states receive Rs 20,000 crore

According to a government reply in the Rajya Sabha on Tuesday, the central government‘s mop-up from excise duty charged on petrol and diesel more than doubled to Rs 3.72 lakh crore in the financial year 2020-21, with states receiving less than Rs 20,000 crore.

In a written response to a query, Minister of State for Finance Pankaj Chaudhary claimed that revenue from the levy of central excise duty on petrol and diesel increased from Rs 1.78 lakh crore in 2019-20 to Rs 3.72 lakh crore in 2020-21. (April 2020 to March 2021).

The increase in collection was mostly due to an increase in the incidence of fuel taxation.

In 2019, the total excise duty on petrol was Rs 19.98 per litre and diesel was Rs 15.83 per litre. Last year, the government increased excise duty on fuel twice, to Rs 32.98 per litre and Rs 31.83 on diesel.

In this year’s budget, the levy on petrol was reduced to Rs 32.90 per litre and diesel to Rs 31.80. This month, it was reduced by Rs 5 per litre on petrol and Rs 10 per litre on diesel after retail prices in the country reached all-time highs.

“In fiscal year 2020-21, the total amount of tax devolved to state governments from the corpus received under the central excise duty was Rs 19,972 crore,” Chaudhary said.

While the total excise incidence on petrol is currently Rs 27.90 per litre and that on diesel is Rs 21.80, states are only entitled to a part of the basic excise duty.

The base excise charge on petrol is Rs 1.40 per litre of the total incidence of taxation. In addition, a Rs 11 special additional excise duty and a Rs 13 road and infrastructure cess are paid per litre. On top of that, a Rs 2.50 agriculture infrastructure and development cess is collected.

Similarly, the basic excise duty on diesel is Rs 1.80 per litre. A special additional excise duty of Rs 8 per litre is paid, as is a road and infrastructure cess of Rs 4 per litre, and an agriculture infrastructure and development cess of Rs 4 per litre is also levied.

“The basic excise duty component is devolved to state governments based on the formula recommended by the Finance Commission from time to time. The current amount of basic excise duty on petrol is Rs 1.40 per litre and Rs 1.80 per litre on diesel “He stated.

Total gasoline excise collection was Rs 2.22 lakh crore in 2016-17, rising to Rs 2.25 lakh crore the next year before falling to Rs 2.13 lakh crore in 2018-19.

Petrol and diesel are now exempt from the Goods and Services Tax (GST), and states collect VAT on top of the excise duty levied by the central government.

“From April 2016 to March 2021, the entire amount of revenue collected through VAT on petrol across various states is Rs 9.57 lakh crore,” he said.

According to the minister’s response, the central government collected Rs 12.11 lakh crore during the same five-year period.