Tax collected by the Centre from the petroleum sector in the form of excise duty fell for the fourth straight year to Rs 2.73 trillion in FY24, down 4.8 per cent from Rs 2.87 trillion in FY23, data from the Petroleum and Natural Gas Ministry shows.
Excise duties on petrol and diesel were last changed in May 2022. On the other hand, fuel consumption in India, a proxy for oil demand, increased 4.6 per cent to hit a record high of 233.32 million tonnes (mt) in FY24.
As a result, the change in tax collections under the excise duty header in FY24 occurred due to a lower overall tax incidence from the Centre’s windfall tax, officials said.
“The average impact of the windfall tax in 2023-24 has been lower than the previous year as global crude rates have been relatively less volatile. This is the reason total excise collections have reduced,” an official said. The data was submitted to Parliament earlier this month.
Excise duty is levied by the Centre on the domestic sale of petrol and diesel. Currently, it is Rs 19.90 per litre of petrol and Rs 15.80 per litre of diesel. On top of this, the state governments levy VAT, sales tax, and other additional charges.
Meanwhile, classified as the Special Additional Excise Duty (SAED), windfall tax is levied on domestically produced crude oil, and the export of diesel, petrol, and jet fuel (ATF). The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
As of August 1, the windfall tax on domestically produced crude oil was reduced to Rs 4,600 per tonne from the previous Rs 7,000 per tonne, while it continued to be nil for exports.
Total tax up
However, the petroleum sector’s total contribution to the exchequer rose in FY24, albeit by a marginal 0.38 per cent to Rs 7.51 trillion, up from Rs 7.48 trillion in FY24. It had shrunk by 3.4 per cent in FY23.
Within this, its contribution to the central government through taxes shrank to Rs 3.5 trillion from Rs 3.7 trillion the year before. Meanwhile, the sector’s contribution in the form of dividends rose to Rs 82,308 crore, up from Rs 57,741 crore.
FY24 : Excise duty payments fell for 4th straight year, overall tax contribution rose
Note: All figures in Rs Crore
Source: Petroleum and Natural Gas Ministry
First Published: Aug 16 2024 | 7:30 PM IST