New Delhi, February 20, 2021: Petrol prices have crossed Rs 100 in many cities of the country. On Saturday, petrol in Delhi reached around Rs 91 (Rs 90.58). Diesel prices are also on record high in many cities. Hence questions are being raised that why the government is not able to curb the rates by cutting tax.

Prime Minister Narendra Modi said that if previous governments had reduced the country’s dependence on crude oil, then the country would not have to bear the burden of expensive oil. It seems that the government is not in the mood to cut taxes yet.

The biggest reason for the record prices of petrol and diesel today is that the taxes charged on them are very high. To determine the prices of petrol or diesel within the country, we take the example of Delhi. First, the base price is added to the price of petrol.

In Delhi, as of 16 February 2021, the base price was Rs 31.82 per liter. After that, 28 paise of transportation added to it. After this, oil marketing companies sell this oil to dealers at a price of Rs 32.10. Next, the central government imposes an excise duty (excise) of Rs 32.90 on every liter of petrol. In this way, the price of petrol becomes 65 rupees.

Apart from this, the petrol pump dealer adds a commission of Rs 3.68 on every liter of petrol. After this, VAT or sales tax levied by the state government is added to the price of petrol where it is sold. For example, 20.61 rupees of VAT is added in Delhi. In this way, in the end, the common man had to pay 89.29 rupees in Delhi for one liter of petrol.

Government earns huge money from tax on oil:

According to Indian Express, the government will receive Rs 3.49 lakh crore from excise duty on petrol and diesel in the current financial year. This will be 39.3 per cent or about Rs 97,600 crore more than the budget estimate of Rs 2.49 lakh crore for the financial year 2020-21. That is, the tax on petrol and diesel is going to be a huge source of income for the government due to the tremendous amount estimated this year despite the Corona period.

Remaining tax reduction:

On the other hand, due to the Corona crisis, there will be a huge reduction in the GST collection of the Central Government and the collection of customs duty in this financial year. According to an estimate, there may be a decline of 25.7 per cent in GST collection and 18.8 percent in customs duty. That is, Rs 1.49 lakh crore less than the GST collection estimate and Rs 26,000 crore less than the custom duty estimate.

Similarly, according to the revised estimates of this year, the corporate tax collection may fall by 34.5 percent to Rs 4.46 lakh crore. Similarly, the income tax collection can also be reduced by 27 percent from the estimate to just Rs 4.59 lakh crore. Excise duty collection has increased despite a sharp decrease in petrol and diesel consumption during the Corona period.

Perhaps this is the reason why the government is not ready to reduce tax on petrol and diesel. That is, the government wants to compensate for the shortfall in GST and other tax collections with the tax of petrol and diesel. Petroleum Minister Dharmendra Pradhan has also made it clear in Parliament that there is currently no proposal by the government to cut taxes on petrol and diesel.