New Delhi: The government has increased excise duty on petrol and diesel by Rs 1.50 a litre but retail prices will not go up as oil companies offset the hike against an expected reduction on account of falling global oil rates.
The duty hike, which was notified late last evening, will boost government revenue by about Rs 13,000 crore on an annual basis and help contain budget deficit.
Indian Oil Corp (IOC), the nation’s largest fuel retailer, said the excise duty hike will not be passed on to consumers and will be adjusted against reduction in rates that was likely by this weekend.
The fall in international oil prices had resulted in six consecutive reduction in petrol prices since August and two in diesel in the last one month. There was a possibility of another round of cut this weekend.
Excise duty on normal or unbranded petrol was hiked from Rs 1.20 per litre to Rs 2.70 per litre and unbranded diesel from Rs 1.46 a litre to Rs 2.96, a government notification said.
The same on branded petrol was raised from Rs 2.35 a litre to Rs 3.85 and on branded diesel from Rs 3.75 to Rs 5.25 per litre.
“For the moment, we are not passing on the increase in excise duty. It is being absorbed by companies and will be adjusted against review in rates which was due on Saturday,” IOC Chairman B Ashok said.
Revision in rates will be considered at the next fortnight (end of November), he said. “As and when we look at price revision, whenever it is due, we will look at the situation and decide on revising rates then.”
Before the duty hike, petrol cost Rs 64.25 a litre in Delhi and diesel Rs 53.35 a litre. They will continue to be priced at the same rate.
“There is no increase in retail prices,” he said.