Global brokerage firm Barclays estimates that the central government could get an additional revenue of Rs 1.4 lakh crore, which would be about 0.67 percent of the total GDP. This will be in addition to the annual revenue of Rs 2.8 lakh crore from the tax / cess already imposed on fuel.
The central government has increased excise duty on petrol and diesel on Tuesday. Global brokerage firm Barclays estimates that the central government could get additional revenue of Rs 1.4 lakh crore, which would be about 0.67 per cent of the total GDP.
Barclays has said in a report, ‘This will be in addition to the annual revenue of Rs 2.8 lakh crore from the tax / cess already on fuel. That is, by taxing fuel in this way, a total of 4.4 lakh crore rupees will come to the government treasury, which is 2.1 percent of GDP.
What is in the report
According to the report, this assessment also assumes that due to the corona lockdown, demand for petrol and diesel will fall by 12 percent in this financial year ie 2020-21. Significantly, the central government has increased excise duty on petrol by Rs 10 and on diesel by Rs 13. With this, the tax on petrol and diesel received at the pump has increased to 69 percent, which is the highest in the world.
A notification was issued on Tuesday night that the road and infra cess on both diesel and petrol has been increased to Rs 8 per liter. Apart from this, additional excise tax of Rs 5 per liter has been imposed on diesel and additional excise tax of Rs 2 per liter on petrol. This is the biggest increase in tax on fuel in India in a day.The share of road cess in this increase will be fully received by the Center, but the share of additional excise duty will have to be shared with the states. Apart from this, the government of Delhi, Haryana, Assam and Punjab has also increased VAT on fuel.
What will be the effect on inflation
Barclays said that the central government is effectively taking advantage of the fall in crude oil, so the impact of this increase on inflation will be very limited. Barclays said, “For consumer price index (CPI) -based inflation, we estimate that a rise in the price of petrol by Rs 2 per liter can lead to an increase of 0.1 to 0.15 per cent in inflation, which is nothing special.”