Govt Hikes Excise Duty On Petrol, Diesel By Rs 2 Each, Says Consumers Won't Be Affected

While the order did not say what impact it would have on retail prices, PTI quoted industry sources as saying that the retail prices are unlikely to be changed. The increased excise duty is likely to be adjusted against the cut in petrol and diesel prices that was warranted because of a fall in international oil prices, it reported.

The ministry of petroleum and natural gas posted on X, “PSU Oil Marketing Companies have informed that there will be no increase in retail prices of Petrol and Diesel, subsequent to the increase effected in Excise Duty Rates today."

The order states that the increased duty has been imposed by the Central government in public interest, under the ambit of section 5A of the Central Excise Act, 1944 and section 147 of the Finance Act, 2002.

In December 2024, the government removed the windfall profit tax on locally produced crude and fuel exports owing to falling global oil prices.

Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri said, “You would have seen a notification from the Ministry of Finance saying that the excise rates are going up by Rs 2 on petrol and diesel. Let me clarify upfront on the record, this will not be passed on to the consumer."

He added the international price of crude came down to around $60 a barrel, but please remember that our oil marketing companies carry inventories over a 45-day period. If you go back to January, the crude price then was $83, which came down subsequently to $75. So the crude inventory that they’re carrying is at $75 on average per barrel. You can legitimately expect prices of petrol and diesel to be moderated by the oil marketing companies in keeping with the global price. In a deregulated sector, you can expect them to accordingly adjust the market retail price.