The massive jump in excise duty on petrol and high speed diesel helped the government mop up nearly 40% of its indirect tax kitty from the two auto fuels in 2015-16, compared to 34% in the previous financial year.
A study by the Comptroller and Auditor General (CAG) showed that Union excise duty collection shot up almost 70% from Rs 1.69 lakh crore during 2013-14 to Rs 2.87 lakh crore in 2015-16, with a majority of the contribution being from petrol, diesel, cigarettes and gutka.
The indirect tax kitty includes duties from customs, central excise and service tax.
Excise revenue from petroleum products, which made up for 52% of collections in 2013-14, went up to almost 69% during 2015-16 as the government resorted to a massive increase in levies in the wake of falling global prices.
The central excise duty on petrol and high speed diesel increased from Rs 1.2 per litre and Rs 1.46 per litre to Rs 8.95 per litre and Rs 7.96 per litre respectively during the last two financial years.
Revenue from petroleum products went up from Rs 88,000 crore in 2013-14 to Rs 1.99 lakh crore in 2015-16. Tax on sin goods (mainly tobacco products) at Rs 21,000 crore was second highest contributor to indirect taxes.
Compared to countries like Pakistan and Sri Lanka, India has one of the highest retail prices of fuel oil in the subcontinent.
The high price of petrol and diesel in India was contrary to the international trend in crude oil prices that crashed from a high of $112 a barrel in 2014 to as low as $30.
Though the lower oil prices substantially reduced India’s oil bill as the country depends on 80% imports, domestic prices were kept high by increasing central excise duties. The excess revenue earned was meant to fund government’s social sector schemes.
The CAG, which tabled its report in Parliament on Friday, however, highlighted the issue by pointing out how the government has been losing major revenue by giving exemptions to industry.
The revenue forgone on account of different exemptions come up to more than Rs 2 lakh crore a year which the auditor has said need to be rationalised.
The revenue forgone for FY2016 on excise duties was Rs 2.25 lakh crore — Rs 2.06 lakh crore as general exemptions and Rs 19,000 crore as area-based exemptions. This was over 78% of total revenue earning from central excise.
The auditor has observed that though the main objective behind issue of exemption orders is to deal with circumstances of exceptional nature, but this objective was not properly defined.
“As such, the duty forgone on account of issue of special exemption orders is not being calculated towards revenue forgone figures,” it noted. Paul Hornung JerseyShare This