Finance Minister Arun Jaitley on Thursday announced an excise duty cut on petrol and diesel by Rs 2 per litre in the Budget 2018. The Oil Ministry had pushing the finance ministry for a cut in excise duty on petrol and diesel. Excise duty is seen as a the main reason for high prices of petrol and diesel.
According to the Finance Bill 2018, the government announced a reduction of excise duty on unbranded and branded petrol and diesel by Rs 2 per litre.
The prices of petrol and diesel have a significant effect on the retail inflation. The fuel price has a direct impact on the selling price of almost every commodity in the market as high cost of fuel means that even the transportation cost would rise. India has the highest retail prices of petrol and diesel among South Asian nations as taxes account for about 40-50 percent of the pump prices.
In the third week of January, petrol price in Mumbai surged to Rs 80.10 per litre followed by Kolkata which saw the second highest rate of petrol among metro cities. Since last year, the oil companies are changing petrol and diesel prices every day after the new dynamic system of fuel prices was introduced. Earlier, the prices of petrol and diesel changed fortnightly every month.
The petrol and diesel prices do not come under the GST. Union Oil Minister Dharmendra Pradhan had in January said his ministry is trying to bring petrol and diesel under the purview of the Goods and Services Tax (GST).