Budget 2019: Petrol, diesel prices hiked by Rs 2 as govt increases excise duty and puts Infrastructure cess on fuel

Union Budget 2019: The government has proposed the slapping of special additional excise duty of Re 1/Litre and Infrastructure cess of Re 1/Litre on petrol and diesel. Finance Minister Nirmala Sitharaman during her speech in Parliament announced additional excise duty and Infrastructure cess of Re 1 per litre each on petrol and diesel. 

"I propose to increase special additional excise duty and road and infrastructure cess each one by 1 rupee a litre on petrol and diesel," FM said.

The move is expected to bring in funds to the central government's revenue bucket. However, despite decreasing oil prices at the global level; govt has taken a step to increase the excise duties of fuel prices at the domestic level.  According to the Ministry of Finance, the Centre has collected over Rs 2.58 lakh crore by levying taxes on the petroleum products in FY19. 

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Petroleum products are huge source of revenue for the government and an increase in excise duty will eventually dig a hole in the pockets of consumers. As on July 4, Petrol was being sold at Rs 70.51 in Delhi and Rs 76.15 per litre in Mumbai, while diesel was priced at Rs 64.33 per litre in Delhi and Rs 67.96 per litre in Mumbai.

As far as the excise duty on fuel prices are concerned, petrol has an excise duty of Rs 17.98 per litre, while VAT levied on petrol is Rs 14.98 per litre. While the overall price charged from dealers amounts to Rs 32.96 per litre. On the other hand, the diesel has an excise duty of Rs 13.83 per litre and VAT of Rs 9.47 per litre, while the price charged to dealers amounts to Rs 23.3 per litre.