Petrol and diesel may become costlier soon in India. Know why

The Indian government has increased the windfall tax on crude oil, which has started fuelling speculation of price hikes for petrol and diesel in the country. The government has increased the windfall tax on crude oil to ₹2,100 per tonne from the existing ₹1,700 per tonne, reveals a notification issued by the Central Board of Indirect Taxes and Customs. The new tax rate is effective from January 3, 2023.

The windfall tax on high-speed diesel for exports has also been raised to ₹7.5 per litre from the existing price of ₹5 per litre. However, the special additional excise duty on petrol remains unchanged at nil.

Previously in July last year, the Indian government imposed a windfall tax on crude oil producers. The central government has maintained that the tax levied on crude oil is in view of the windfall gains made by domestic crude producers and refiners due to high global crude and product prices.

Petrol and diesel prices across India had remained unchanged for more than seven months, which brought a bit of relief to the vehicle owners and common people amid the rising inflation and after a period when the fuel prices witnessed an upward journey increasing pressure on both motorists and non-motorists. The prices of motor fuels remained static since Finance Minister Nirmala Sitharaman reduced the excise duty on petrol by eight rupees per litre and on diesel by six rupees per litre across India on May 21 last year. However, the latest move of increasing windfall tax on crude oil may impact that status quo.

Currently, petrol and diesel prices in Delhi are ₹96.72 per litre and ₹89.62 per litre, respectively. In Mumbai, petrol costs ₹106.31 per litre, while diesel costs ₹94.27 a litre.