The government would shoulder the whole expense of the excise tax reduction on petrol and diesel: FM Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman emphasized on Sunday that the whole cost of the cut in excise duty on petrol and diesel is paid by the central government, and the measure will have no impact on state revenue.

The finance minister stated in a tweet that Excise Duty on fuel and diesel is made up of Basic Excise Duty (BED), Special Additional Excise Duty (SAED), Road & Infrastructure Cess (RIC), and Agriculture & Infrastructure Development Cess (AIDC).

The Basic Excise Duty can be shared among states. The Special Additional Excise Duty, Road and Infrastructure Cess, and Agriculture and Infrastructure Development Cess are not transferable. The finance minister announced an excise duty drop of Rs 8 per litre on petrol and Rs 6 per litre on diesel on Saturday. This decrease can be seen in the Special Additional Excise Duty.

This is not for sharing. As a result, the central government bears full responsibility. Prime Minister Narendra Modi’s administration reduced excise tax on petrol by Rs 5 per litre and diesel by Rs 10 per litre in November 2021. The duty reduction was from the Road & Infrastructure Cess (RIC) category in November 2021. As per the finance minister, the central government would bear the whole expense of these two decreases in excise rates on petrol and diesel.

The tax decrease implemented in November 2021 will cost the Centre Rs 1,20,000 crore per year. The total income consequence for the Centre from these two duty cuts is therefore Rs 2,20,000 crore per year, according to the finance minister.