Excise Duty Cuts on Fuel: Balancing Domestic Priorities Amid Global Uncertainty

The government has reduced excise duty on petrol and diesel by Rs 10/litre, while increasing export duties on diesel and aviation turbine fuel (ATF), resulting in a projected net revenue loss of Rs 5,500 crore in the next fortnight, Central Board of Indirect Taxes and Customs (CBIC) Chairman Vivek Chaturvedi announced on Friday.

Chaturvedi explained that the excise duty cut could lead to a revenue shortfall of approximately Rs 7,000 crore, but the hike in special additional excise duty on diesel and ATF exports could offset this with an additional Rs 1,500 crore revenue. The excise reductions aim to alleviate financial pressures on oil marketing companies while maintaining domestic price stability.

This strategic move prioritizes domestic fuel availability and energy security amidst the global supply uncertainties caused by international tensions, such as the conflict involving the US, Israel, and Iran, which had driven crude oil prices to an unprecedented high of USD 119 per barrel earlier this month.

(With inputs from agencies.)