The federal government has asked state governments to reduce the value-added tax (VAT) on gasoline and diesel.
The Indian government hopes that by announcing this reduction in excise duty on petrol and diesel today, it will alleviate the impact of rising gasoline prices on consumers.
According to reliable sources, fuel prices are expected to fall as a result.
Farmers will benefit from a reduction in the excise duty on diesel that is twice as large as the reduction in the excise duty on gasoline during the upcoming Rabi season.
Excise taxes on gasoline and diesel have been reduced, but this comes at a time when gasoline and diesel prices in the country, including the four major metropolises, are at all-time highs.
Diesel prices have reached the 100 mark in three metros, in addition to the four major metros, and are currently at 98.42 per litre in the national capital, the highest in the country.
Even if the excise tax is reduced by 5%, the national capital’s gas price will still be 105.69 per litre, well above the $100 mark.
On Wednesday, petrol cost 110.04 rupees per litre in Delhi, while diesel cost 98.42 rupees per litre. In Mumbai, diesel was priced at 106.62 rupees per litre, while petrol was priced at 115.85 rupees.
As a pandemic drained demand, international oil prices fell to multi-year lows, prompting the excise tax on gasoline to be raised from 19.98 cents per litre to 32.9 cents per litre last year.
Despite the fact that oil marketing companies raised LPG cylinder prices by 266 earlier this week, this decision is being viewed as a Diwali sop to beleaguered customers.
The administration, on the other hand, claimed that lowering the excise duty on gasoline and diesel would boost consumption while keeping inflation low, thereby benefiting the poor and middle class.
“Today’s decision is likely to significantly stimulate the entire economic cycle,” according to the official announcement.
Crude oil prices have risen dramatically in recent months all over the world. According to government sources, it has resulted in a recent increase in the price of domestic gasoline and diesel.