Petrol price was reduced by Rs 6.07 per litre and diesel by Rs 11.75 per litre in Delhi on Thursday as oil companies passed on the reduction in excise duty on fuel prices to consumers. In Mumbai, petrol prices were reduced by Rs 5.87 and diesel by Rs 12.48 per litre. The central government announced on Wednesday evening that it would be reducing central excise duty on petrol and diesel by Rs 5 and Rs 10 respectively. It added that the idea behind reducing the excise duty is to give a fillip to the economy which is recovering the ravages of the pandemic.
Since states charge local sales tax or VAT not just on the base price but also on the excise duty levied by the centre, the total incidence of price reduction is higher.
After the introduction of the Goods and Services Tax (GST) regime, excise duty is levied only on petrol, diesel, ATF and natural gas. All other goods and services are under the GST regime.
The total increase in petrol price since the May 5, 2020 decision of the government to raise excise duty to record levels had totalled Rs 38.78 per litre. Diesel rates have during this period gone up by Rs 29.03 per litre.
The tax cut follows an unrelenting hike in international oil prices pushing pump rates across the country to their highest-ever levels. India depends on oil imports to meet about 85 per cent of its domestic oil needs. Therefore, the international prices of crude oil have a significant bearing on the economy.
While petrol soared to above Rs 100-a-litre-mark in all major cities, diesel had crossed that level in more than one-and-a-half dozen states.
On Thursday, petrol in Delhi was priced at Rs 103.97 for every litre and diesel at Rs 86.67 per litre. In Mumbai, petrol was being sold at Rs 109.98 per litre and diesel for Rs 94.14 per litre. On Wednesday, petrol in Delhi was sold at Rs 110.04 for every litre and Rs 115.85 per litre in Mumbai. Diesel in the national capital was being sold at Rs 98.42 per litre and Rs 106.62 per litre in Mumbai.
Kolkata saw the price of diesel being reduced by Rs 5.82 to Rs 104.67 per litre and that of diesel by Rs 11.77 to Rs 89.79 per litre
Petrol price in Chennai has been reduced by Rs 5.26 to Rs 101.40 per litre and diesel by Rs 11.16 to Rs 91.43 per litre.
Prices differ from state to state depending on the local incidence of taxes.
The excise duty cut announced on Wednesday night is the highest-ever reduction in excise duty. It rolls back a part of the Rs 13 and Rs 16 per litre increase in taxes on petrol and diesel effected between March 2020 and May 2020 to avoid passing on to consumers the sharp fall in international oil prices.
The hike in excise duty had taken central taxes on petrol to their highest level of Rs 32.9 per litre and that on diesel to Rs 31.8 a litre.
Reducing the excise duty, the Union government also urged states to commensurately reduce VAT on petrol and diesel to give relief to consumers. Six BJP-ruled states of Uttar Pradesh, Goa, Karnataka, Uttarakhand, Tripura and Bihar reduced VAT.
(With inputs from PTI)