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Govt delays additional excise duty of Rs 2 per litre on petrol, diesel for a month

New Delhi: In an effort to allow the industry more time to execute the policy, the government has delayed by one month the imposition of an additional Rs 2 per litre excise duty on gasoline and diesel that are not laced with ethanol and biodiesel. The additional excise tax will now be collected starting on […]

Edited By : Vikas Kumar | Updated: Dec 8, 2022 14:57 IST
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New Delhi: In an effort to allow the industry more time to execute the policy, the government has delayed by one month the imposition of an additional Rs 2 per litre excise duty on gasoline and diesel that are not laced with ethanol and biodiesel.

The additional excise tax will now be collected starting on November 1, 2022, according to a notification published in the Gazette by the finance ministry late on Friday (September 30).

For the fiscal year commencing in April 2022, Union Finance Minister Nirmala Sitharaman included an additional duty of Rs 2 per litre on gasoline and diesel that are not blended with ethanol or biodiesel, respectively. This obligation was supposed to take effect on October 1, 2022, however it has now been delayed until November.

In order to reduce reliance on oil imports and give farmers an additional source of income, 10% ethanol, produced from sugarcane or surplus foodgrain, is currently blended or mixed in petrol (i.e. 10% of ethanol combined with 90% of petrol).

However, bio-diesel, which is made from non-edible oilseeds, is only being blended experimentally with diesel, the most common fuel in the nation.

“Blending of fuel is a priority of this government. To encourage the efforts for blending of fuel, unblended fuel shall attract an additional differential excise duty of Rs 2 per litre from the 1st day of October 2022,” Sitharaman had stated in her Budget speech in the Lok Sabha on February 1.

Her ministry announced on September 30 that starting on November 1, 2022, the basic excise duty rate for gasoline that is “designed for retail sale, not so blended with ethanol or methanol” will increase to Rs 3.40 per litre from the present Rs 1.40.

Branded gasoline that is not ethanol-laced would have an excise fee of Rs. 4.60 per litre as opposed to Rs. 2.60 at the moment.

When it came to diesel, it stated that the fuel “intended for retail sale, not so blended with alkyl esters of long chain fatty acids produced from vegetal oils, usually known as bio-diesels” would be subject to Rs 3.80 per litre of basic excise duty rather than Rs 1.80. Instead of the current Rs. 4.20 basic excise duty, branded diesel would now be subject to Rs. 6.20.

Petrol and diesel are subject to basic excise duty, cess, and special extra excise charge. The total excise rate for gasoline is Rs. 19.90 per litre, and the rate for diesel is Rs. 15.80.

It is unlikely that the nation will be able to build infrastructure to manufacture bio-diesel in the scale needed for blending in diesel, industry officials said. The additional duty will force oil companies to purchase more ethanol for mixing in gasoline and arrange for logistics for transporting to deficient areas.

To lessen its reliance on expensive oil imports, the government this year advanced the goal of achieving 20% ethanol blending with gasoline to 2025, five years earlier than its previous plan. Earlier this year, ethanol blends of 10% were attained.

India is the third-largest oil importer in the world, and more than 85% of its oil needs are met by foreign suppliers.

First published on: Oct 01, 2022 05:37 PM IST
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