The government on Friday reduced excise duty on petrol and diesel to Rs 3 per liter on petrol and zero per liter on diesel. Windfall profit tax on export of diesel has been fixed at Rs 21.5 per litre.
The cuts come amid a global energy crisis triggered by the war between the US and Israel over Iran and the resulting blockade imposed by Tehran on the Strait of Hormuz, through which one-fifth of the world’s crude oil and gas supply, or 20 to 25 million barrels per day, is sent.
Before the conflict, India bought 12 to 15 percent of that oil.
According to the gazette notification, “In exercise of the powers conferred by section 5A of the Central Excise Act, 1944 (1 of 1944), read with section 147 of the Finance Act, 2002 (20 of 2002), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 05/2019-Central Excise Fee, dated the 6th July, 2019, published in the Gazette of India, Extraordinary, Part II, Sub-section (i), vide number G.S.R. 488(E), dated the 6th July, 2019, namely: – In the said notification, (i) against serial number 1, in column (4), the entry “Rs. In place of “3 per litre”, “(ii)” will be written, in place of serial number 2 in column (4), “Zero” will be written.
This move has come as a relief to oil marketing companies, who were facing losses on the marketing side due to rising crude oil prices. Retail prices of petrol and diesel are currently unchanged.
The central government has also imposed a new special additional excise duty on aviation turbine fuel, with the rate reduced to Rs 29.5 per liter due to exemption. These changes have become effective from March 26.
Earlier, the Indian government had said that despite the ongoing developments in West Asia, fuel supplies remained stable across the country and retail fuel outlets were functioning normally, and urged the public not to believe rumors or make panic purchases.
According to a statement issued by the Ministry of Petroleum and Natural Gas, “all retail shops across the country are operating normally”, although there were reports of panic buying in some areas due to the rumours.
The ministry clarified that there is adequate supply of fuel in the country. “Adequate stocks of petrol and diesel are available at all petrol pumps in the country,” the statement said, and reiterated the advice to citizens not to “believe in rumours”.
The government also said that all refineries are working at full capacity to ensure uninterrupted energy supply. “All refineries are operating at full capacity and adequate crude oil reserves are available,” the ministry said. The ministry further said that LPG production from refineries has been increased to meet domestic consumption.