Giving some relief to the common man on the eve of Diwali, the central govt had decided to reduce the excise duty on petrol and diesel, which will lead to a cut in the price of both fuels.
The Government of India has announced that the excise duty on petrol will be reduced by Rs 5, and the excise duty on diesel will be cut by Rs 10 from tomorrow, according to a tweet by news agency ANI.
According to ANI, govt sources have said that this tax cut will come as a boost to the farmers during the upcoming Rabi season. The central govt also urged the state governments to reduce VAT on petrol and diesel to give relief to consumers.
Despite this cut, the price of petrol will remain more than Rs100 in most places, as the current price is more than Rs105 almost everywhere, and more than Rs110 in most states.
On the other hand, with a cut of Rs10, the price of diesel is expected to come down below Rs100 in most places. If the state govts follow suit and cut VAT on petrol and diesel, the prices will come down even further.
The petrol and diesel prices have risen sharply in the last few months, caused by price rise in global oil prices. This has led to a price rise of almost every other commodity due to cascading effects. Taxes, both the excise duty levied by the central govt and VAT levied by state governments constitute the major part of the fuel price in India. In fact, taxes comprise more than 50% of the retail fuel prices.
The Union government has been trying to bring petroleum products under the ambit of GST, which will result in a significant decrease in fuel prices. But almost all state governments are against it, as it is a major source of income for the states.