Will You Be Affected by the New ₹2 Excise Duty Hike on Petrol and Diesel?

The Indian government recently announced a ₹2 per litre increase in Special Additional Excise Duty (SAED) on both petrol and diesel, effective from April 8. This move has sparked curiosity and concern among many, especially about whether the retail prices of petrol and diesel will rise. Let’s break it down in simple terms to understand what this change means for regular fuel buyers.

What Is the Excise Duty Hike All About?

The hike in excise duty on petrol and diesel refers specifically to the tax charged on exported fuel. With the revision, the SAED on petrol has gone up from ₹11 to ₹13 per litre, while diesel has increased from ₹8 to ₹10 per litre. However, it’s important to note that this increase applies only to fuel meant for exports, not to fuel sold at domestic petrol pumps.

Will There Be a Petrol and Diesel Price Hike for Consumers?

Thankfully, no. The retail prices of petrol and diesel in India will remain unchanged. The Ministry of Petroleum and Natural Gas was quick to reassure the public that the duty hike will not impact the prices paid by everyday consumers. During a recent press conference, Petroleum Minister Hardeep Singh Puri made it clear that the burden of the new excise duty on petrol and diesel will not be passed on to the public, easing fears of a sudden petrol and diesel price hike at the retail level.

Why Retail Prices Are Staying Steady

The explanation behind the stable retail prices of petrol and diesel lies in how oil is priced and stocked by state-run oil marketing companies (OMCs). Even though international crude prices have recently dipped to around $60 per barrel, OMCs currently hold inventories purchased at higher rates, around $75 per barrel. Since they maintain stocks for over 45 days, there is a buffer in place that shields short-term fluctuations from affecting retail pricing.

If crude prices continue to remain low, OMCs may eventually have the scope to adjust retail prices downward. But for now, the excise duty increase on exports will not disturb the prices at the fuel stations.

What’s Behind the Global Crude Price Drop?

Interestingly, this duty hike comes at a time when global crude oil prices are falling. The drop has been driven by rising production from non-OPEC countries and a dip in demand due to global economic concerns, including trade tensions spurred by tariff actions from the US.

Conclusion

While tax changes can often be worrying, the recent excise duty on petrol and diesel applies only to exports and has no bearing on the retail prices of petrol and diesel in India. For now, you can continue to fill your tank without worrying about a sudden petrol and diesel price hike. The government’s clarification provides some relief, especially at a time when fuel affordability is a key concern for many households.

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