Govt to Lose ₹7,000 Crore in Two Weeks After Fuel Duty Cut

The Centre has reduced excise duty on petrol and diesel by ₹10 per litre to cushion refiners against losses caused by surging global crude prices following the Iran conflict. However, the cut has not lowered retail fuel prices.

To prevent private refiners from diverting supplies to export markets, the government has imposed export duties of ₹21.5 per litre on diesel and ₹29.5 per litre on aviation turbine fuel. The move is aimed at ensuring adequate domestic fuel availability.

With the latest revision, total central taxes, including excise duty and cess, stand at ₹11.9 per litre for petrol and ₹7.8 per litre for diesel.

A report states that according to Central Board of Indirect Taxes and Customs chairman Vivek Chaturvedi, the duty reduction will result in a revenue loss of ₹7,000 crore over a fortnight at current consumption levels, while export taxes are expected to bring in ₹1,500 crore during the same period. On an annualised basis, this translates to a loss of ₹1,82,500 crore, partially offset by ₹39,100 crore in export tax collections. The export duty will be reviewed every two weeks.

Also read: Centre Cuts Petrol, Diesel Excise Duty by ₹10/litre, Retail Price Drop Unlikely

Oil minister Hardeep Singh Puri said in a post on X that the government has absorbed a significant fiscal hit to ease pressure on oil marketing companies, which are currently incurring losses of about ₹24 per litre on petrol and ₹30 per litre on diesel.

Rising crude prices and a weakening rupee have pushed up input costs for refiners since the start of the Iran conflict. Brent crude has averaged $95 per barrel in March, up from $69 in February, while the rupee has depreciated to 94.8 against the dollar.

Meanwhile, private refiner Nayara Energy has raised retail fuel prices, which could shift demand towards state-run fuel retailers.