Excise Duty Collections from Petroleum Sector Decline by 4.8% in FY24
By: Admin
Date: August 17, 2024
Categories: Central Excise
Reading Time: 4 Minutes
Overview of Decline
Excise duty collections from the petroleum sector decreased by 4.8% in FY24, totaling Rs 2.73 trillion compared to Rs 2.87 trillion the previous year. This decline marks the fourth consecutive year of falling excise duty collections.
Factors Contributing to the Decline
A senior government official linked this drop to reduced windfall tax gains. The windfall tax impact for 2023-24 was less significant due to relatively stable global crude oil rates.
Excise Duties and Fuel Consumption
The last revision of excise duties on petrol and diesel occurred in May 2022. Despite this, India’s fuel consumption increased by 4.6% in FY24, reaching a record high of 233.32 million tonnes, as reported by the Petroleum and Natural Gas Ministry.
Current Tax Rates
The central government currently levies an excise duty of Rs 19.90 per litre on petrol and Rs 15.80 per litre on diesel. States also impose VAT, sales tax, and other charges on these fuels.
Windfall Tax Adjustments
The windfall tax, formally known as the Special Additional Excise Duty (SAED), applies to domestically produced crude oil and exports of diesel, petrol, and jet fuel (ATF). Authorities review the tax rates every fortnight based on average oil prices from the previous two weeks. As of August 1, the windfall tax on domestically produced crude oil dropped to Rs 4,600 per tonne from Rs 7,000 per tonne, with exports remaining exempt.
Total Tax Contribution
Despite the decline in excise duty collections, the petroleum sector’s overall tax contribution to the exchequer increased slightly by 0.38% in FY24, reaching Rs 7.51 trillion, up from Rs 7.48 trillion in FY23. This modest rise is significant as the sector’s contribution had decreased by 3.4% in FY23.
The sector’s contribution to the central government via taxes fell to Rs 3.5 trillion from Rs 3.7 trillion. However, its dividends increased to Rs 82,308 crore from Rs 57,741 crore.
Import Dependency
In 2023-24, India sourced more than 87.7% of its crude oil requirements through imports.
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