Petroleum taxes are set to give big bonanza to the government in FY22 as the recovering economy and improved demand is set to increase its excise collections over the highest ever level reported in pandemic hit FY21.
As per latest government data, central excise duty collection has already touched Rs 1,37,236 crore till August in FY22. This is a growth of almost 37 per cent over Rs 1,00,398 crore excise revenue collected by the Centre in the first five months of FY21.
Tax experts said that if the current movement is maintained, which is likely, given the swift recovery being seen in the economy resulting also in a pick up in demand for petroleum products, Centre's excise revenue in FY22 would be over Rs 3,89,662 crore excise revenue in FY21.
The FY21 excise revenue of the Centre is at the highest level so far. Sharp increase in duty on petrol and diesel in FY21 is the main reason why excise revenue has been on an upswing.
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When crude prices were down, instead of passing the benefit to consumers, the government raised excise duty on auto fuels in March last year and again in May, 2020. For petrol, duty rose from Rs 19.98 a litre to Rs 32.90, while for diesel it increased from Rs 15.83 a litre to Rs 31.80 a litre. This rise in taxes has boosted the Centres coffers and has also contributed to higher fuel rates that has reached historic high levels across the country.
While rising global crude price has renewed demand for a cut in duty levels of petrol and diesel to contain its regularly rising retail prices, the government seems to be in no hurry for duty cuts as extra revenue from the oil sector is helping in making extra expenses required for various Covid relief measures.
In the months from April to August this year, the Central excise collection has been Rs 154 crore, Rs 36,809 crore, Rs 30,944 crore, Rs 32,480 crore and Rs 36,849 crore respectively.
The excise collections in the first five months of FY21 had been Rs 80 crore, Rs 10,876, Rs 24,391 crore, Rs 32,548 crore and Rs 32,503 crore respectively.