Duty Estimate of Budget ₹ 3.2 Lakh Crore. Can be met: ICICI Sec.
Analysts said that the Center has cut excise duty on petrol and diesel by ₹ 8.5 per liter without affecting the revenue target from tax on both fuels.
Petrol and diesel prices have historically been high after a steady increase in rates over the past nine months. There have been calls from opposition parties as well as sections of society to reduce excise duty to ease consumer pain.
“We estimate excise duty on auto fuel in FY22, if it is not cut, at ₹ 4.35 lakh crore versus the budget estimate estimate 3.2 lakh crore.
ICICI Securities said in a note, “Thus, even if excise duty is deducted by ₹ 8.5 per liter on or before April 1, the budget estimate for the fiscal year can be met.”
The firm expressed optimism over the demand for excise duty cuts, given privatization and inflation concerns, but expected it to be more modest than the est 8.5 liter.
Between March and May 2020, excise duty on petrol and diesel was increased by ₹ 13 and ₹ 16 per liter, and now stands at 31.8 per liter on diesel and ₹ 32.9 per liter on petrol.
This increase was meant to reduce the gains derived from international crude oil prices coming down to a two-decade low.
But, with oil prices recovering, it has not yet restored taxes to their original levels.
ICICI Securities said, “If the deduction is more modest … then the excise duty for FY 2018 will be higher than the budget estimate.”