It turns out that the central government’s argument on the prices of petroleum products has no certainty. During the April-July period of the current financial year, the Center received over Rs 1 lakh crore in excise duty on petroleum products.
It is learned that Union Finance Minister Nirmala Sitharaman recently commented that the excise duty could not be reduced due to the burden of oil bonds issued during the last UPA government.
However, the latest figures released by the Comptroller General of Accounts of the Ministry of Finance contradict the government’s contention. The Center has to pay Rs 10,000 crore for oil bonds for the current financial year. Just in the first four months of the financial year, the government got Rs 1 lakh crore of revenue from the excise duty on petroleum products. Revenue for the same four-month period last year was Rs 67,895 crore. This means the Centre got an additional revenue of Rs 32,492 crore. Industry sources estimate that the current financial year will see an additional revenue of Rs 1 lakh crore as compared to last year.
Considering the revenue generated by the Center through taxes on petroleum products, it is understandable that bond payments are not a big issue for the government.
In July, the Center had collected Rs 3.35 lakh crore in revenue from taxes on petrol and diesel in the 2020-21 financial year, the Union Minister of State for Petroleum said in July. Although crude oil prices dropped last year, prices of petroleum products did not go down due to the tax hike. On the other hand, the global impact of the Covid-19 has waned and crude oil prices have risen again, pushing up fuel prices. It is now interesting to see what action the Center will take on this.