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Main » Budget 2018: Excise duty on petrol, diesel cut; Relief to vehicle owners

Budget 2018: Excise duty on petrol, diesel cut; Relief to vehicle owners

02 February 2018

However, that made no difference to the rising petrol and diesel prices as this Rs 8 amount was converted to "road cess" on fuel, thereby, making no change in the price of petrol and diesel for the consumer effectively.

Unbranded Petrol which attracted excise of Rs 6.48 per litre has been reduced to Rs 4.48 per litre. This net increase of tax by Rs 2 per litre on fuel will be offset by the Rs 2 per liter reduction in basic excise duty.

The central government levies Rs 19.48 per litre excise duty on petrol and Rs 15.33 on diesel.

RAC fuel spokesman Simon Williams says that, while costs are sure to be taking their toll on drivers, there is a "glimmer of hope" that fuel prices will drop again in the near future.

Notably, the prices of petrol and diesel have been increasing in the recent past due to the rising price of crude oil in global market and weakening Indian Rupee.


The government has excluded petrol and diesel from the ambit of GST (Goods and Service Tax). It will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931. "So, given that it is free pricing now, any projection on prices of petrol and diesel will be hard", Raju Kumar, tax partner, EY, said.

Earlier, the Finance Ministry had announced a Rs 2 per litre cut on petrol and diesel with effect from October 4, 2017, to cushion the impact of rising global prices of these petro products. Production curbs by the Organisation of the Petroleum Exporting Countries and high demand have led to the surge.

During October month, Moody's said, "There is limited flexibility for the government to reduce taxes further if it were to maintain its fiscal discipline. This proves our stand that the BJP has always been in favour of capitalists", Siddaramaiah, who also holds the finance portfolio, said.

The much-awaited Union Budget 2018 has hiked petrol price, and the diesel price has remained unchanged. States are also able to levy variable taxes as a result of which prices vary across states.

Budget 2018: Excise duty on petrol, diesel cut; Relief to vehicle owners