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Coronavirus lockdown: Govt to suffer hefty loss in jet, auto fuel taxes
- The loss could be as high as ₹16,000 cr for petrol and diesel alone, going by the consumption trend and the current excise duty of ₹22.98 on a litre of petrol and ₹18.83 on a litre of diesel
- India, so far this fiscal, consumed an average 3.4 billion litres of petrol and 8.3 billion litres of diesel in a month
The central government is set to suffer a hefty loss in excise duty collections on jet fuel and auto fuel in the three-week lockdown until 14 April, with aircraft grounded and most vehicles off roads.
The loss could be as high as ₹16,000 crore for petrol and diesel alone, going by the consumption trend and the current excise duty of ₹22.98 on a litre of petrol and ₹18.83 on a litre of diesel. India has consumed an average 3.4 billion litres of petrol and 8.3 billion litres of diesel in a month so far this fiscal year.
With air travel suspended, losses from excise duty on aviation turbine fuel levied at 11% of its price will add heavily to the burden.
The impact is as bad for states, which levy value-added tax (VAT) on petrol, diesel and jet fuel. Delhi, for example, levies a VAT of ₹14.79 per litre of petrol and ₹9.19 a litre on diesel at current prices.
The lockdown and halt in economic activities have also affected the potential of raising revenue through taxes on fuel. The Union government had in the amendments to the Finance Bill 2020 passed in Parliament earlier this month kept enough legroom for adding another ₹8 a litre to the special additional excise duty on petrol and diesel, but its effectiveness in mobilizing revenue has come down as fuel consumption has tapered off.
Petroleum products offer the easiest mode of raising tax revenue for the government at times when consumption is normal, unlike direct taxes which offers assessees the scope of taking advantage of various exemptions. Petroleum products account for roughly 30% of state governments’ revenue.
India is bracing for a sharp economic slowdown in the March and June quarters as factories remained closed and consumer demand was at rock bottom. India’s economy grew at 4.7% in the December quarter, its slowest pace in six years.
Sales of petrol and diesel have plummeted during the lockdown, although the sale of liquified petroleum gas (LPG) cylinders has gone up, said an official of Indian Oil Corp. Ltd. “Usually, there is no supply of LPG cylinders on Sundays, but this Sunday, we supplied about eight lakh cylinders,” said the official, who spoke on condition of anonymity.
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First Published:31 Mar 2020, 09:48 AM IST
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