While the pandemic pummelled tax collection across the board, excise duty mop-up jumped 48% in the current fiscal on the back of a record increase in taxes on petrol and diesel, that more than made up for the below normal fuel sales.
Excise duty collection during April-November 2020, was at ₹ 1,96,342 crore, up from ₹ 1,32,899 crore mop-up during the same period in 2019, according to data from the Controller General of Accounts (CGA).
This despite the fact that over 10 million tonnes less diesel – the most used fuel in the country – was sold during the eight months period.
Diesel sales during April-November 2020, stood at 44.9 million tonnes as compared to 55.4 million tonnes a year back, according to data from the oil ministry's Petroleum Planning and Analysis Cell (PPAC).
Petrol consumption too was lower at 17.4 million tonnes, compared to 20.4 million tonnes during April-November 2019.
While Goods and Services Tax (GST) apply on most products since its introduction in 2017, oil products and natural gas has been kept out of its preview. Excise duty, which accrues to the centre, and VAT that goes to the state government, are levied on their sale.
Industry sources said the jump in excise duty was primarily because of a record increase in taxes on petrol and diesel during March and May last year.
The government had raised excise duty on petrol by ₹ 13 per litre and that on diesel by ₹ 16 a litre in two tranches to mop up gains arising from international crude oil prices falling to a two-decade low.
With this, the total incidence of excise duty on petrol rose to ₹ 32.98 per litre and that on diesel to ₹ 31.83 a litre.
Petrol costs ₹ 84.70 a litre in Delhi and a litre of diesel comes for ₹ 74.88.
In full 2019-20 fiscal (April 2019 to March 2020), excise collection totalled ₹ 2,39,599 crore, according to CGA.
Central excise duty makes up for 39% of petrol and 42.5% of diesel. After considering local sales tax or VAT, the total tax incidence in the price is about two-third of the retail rate.
The excise tax on petrol was ₹ 9.48 per litre when the Modi government took office in 2014, and that on diesel was ₹ 3.56 a litre.
The government had between November 2014 and January 2016, raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices.
In all, duty on petrol rate was hiked by ₹ 11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped government's excise mop up more than double to ₹ 2,42,000 crore in 2016-17, from ₹ 99,000 crore in 2014-15.
The government had cut excise duty by ₹ 2 in October 2017, and by ₹ 1.50 a year later. But it raised excise duty by ₹ 2 per litre in July 2019. It again raised excise duty on March 2020, by ₹ 3 per litre each. In May that year, the government hiked excise duty on petrol by ₹ 10 per litre and that on diesel by ₹ 13 a litre.
While basic excise duty on crude is not so significant, it is ad valorem (a certain percentage of value) on ATF at 11% and on natural gas-compressed 14%. In case of an ad valorem system, earnings happen only if the product price goes up.
According to CGA, over tax revenue of the government is down 45.5% at ₹ 688,430 crore during April-November. For the full 2020-21 fiscal (April 2020 to March 2021), the government had budgeted ₹ 16.35 lakh crore tax revenue.
Corporation tax mop-up is down 35% at ₹ 185,699 crore and income tax collection is 12% lower at ₹ 235,038 crore, the CGA data showed.