Govt amends law to get power to hike tax on petrol, diesel by Rs 8 per ltr

The government on Monday amended the law to get enabling powers to raise excise duty on petrol and diesel by Rs 8 per litre each in future.

Finance Minister Nirmala Sitharaman moved an amendment to the Finance Bill, 2020, to raise the limit up to which the government can raise special excise duty on petrol and diesel to Rs 18 per litre and Rs 12, respectively.

The amendment along with the Finance Bill was passed without a debate in the Lok Sabha.

The government had on March 14 raised excise duty on petrol and diesel by Rs 3 per litre each to raise an additional Rs 39,000 crore in revenue annually. This duty hike included Rs 2 a litre increase in special additional excise duty and Re 1 in road and infrastructure cess.

This hike took the special additional excise duty to maximum permissible in law -- Rs 10 in case of petrol and Rs 4 in case of diesel.

Now, through an amendment of the Eighth Schedule of the Finance Act, this limit has been increased to Rs 18 per litre in case of petrol and Rs 12 in case of diesel.

This is an enabling provision and no change in excise duty is being done as of now, an official said.

The amendment gives powers to the government to raise the duty by up to Rs 8 per litre in petrol and diesel at any time it wishes.