Excise duty cut on petrol and diesel will be borne entirely by Centre: FM Sitharaman

New Delhi; Union Finance Minister Nirmala Sitharaman reiterated on Sunday  that the central government will cover the whole cost of the drop in excise duty on petrol and diesel, and that the state's revenue will be unaffected. "Basic Excise Duty (BED), Special Additional Excise Duty (SAED), Road & Infrastructure Cess (RIC), and Agriculture & Infrastructure Development Cess (AIDC) together constitute Excise Duty on fuel and diesel," the finance minister wrote in a tweet.

The Basic Excise Duty can be shared across states. Non-sharable taxes include Special Additional Excise Duty, Road & Infrastructure Cess, and Agriculture & Infrastructure Development Cess. The finance minister announced an excise duty reduction of Rs 8 per litre on petrol and Rs 6 per litre on diesel on Saturday. The Special Additional Excise Duty has been reduced. This cannot be shared. As a result, the federal government bears the whole burden.

Prime Minister Narendra Modi's government reduced excise duty on petrol by Rs 5 per litre and diesel by Rs 10 per litre in November 2021. The Road & Infrastructure Cess (RIC) category received a duty reduction in November 2021.

Finance minister said, the central government is responsible for the entire cost of these two decreases in excise duties on gasoline and diesel. "The basic ED, which may be shared between states, has remained unchanged. As a result, the Centre bears the full brunt of these two duty cuts (made on November 21 and 22) "she said.

The tariff decrease announced on Saturday will save the Centre Rs 1,00,000 crore every year. The tariff decrease announced in November 2021 will save the Centre Rs 1,20,000 crore each year. According to the finance minister, the total revenue impact of these two duty reduction on the Centre is Rs 2,20,000 crore per year.

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