In a move that will hit the pockets of the common man, the Union Budget 2019-20 proposes hiking the duty and cess on petrol and diesel by ₹2 per litre each.
“Crude prices have softened from their highs,” Ms. Sitharaman said in her Budget speech. “This gives me a room to review excise duty and cess on petrol and diesel. I propose to increase Special Additional Excise Duty and Road and Infrastructure Cess each by one rupee a litre on petrol and diesel.” This means that the special additional duty (SAD) will go up to ₹8 per litre for petrol and ₹2 per litre for diesel. The Road and Infrastructure Cess on petrol will increase to ₹9 per litre for both fuels.
However, industry officials say that the effective increase in the price paid by the consumers will likely be more than ₹2 per litre.
“The effective increase in the price will be more than ₹2 per litre because there are calculations to be made regarding VAT and other things,” a senior official in a state-run oil marketing company told The Hindu on the condition of anonymity. “We are currently doing those calculations and will arrive at our assessment once there is clarity from the Finance Ministry regarding a few issues.”
These issues could possibly be the fact that while Ms. Sitharaman’s Budget speech and its annexure mentioned a ₹1 per litre increase each in the SAD and the cess, the Finance Bill that brings the Budget into law said that these increases would total a much higher ₹5 a litre.
“This seems to be a misprint as the communication we have so far received is that the increase is ₹2 per litre,” the official said. “But more clarification is needed.”
In a bid to spur the ‘Make in India’ goal and to bring domestic manufacturing on a level-playing field, Ms. Sitharaman said that basic customs duty is being increased on items such as cashew kernels, PVC, vinyl flooring, tiles, metal fittings, mountings for furniture, auto parts, certain kinds of synthetic rubbers, marble slabs, optical fibre cable, CCTV camera, IP camera, digital and network video recorders etc.
Further, she proposed removing exemptions from customs duty for certain electronic items being manufactured in India.
The Budget also proposes customs duty reduction on certain raw materials and capital goods, including certain inputs of CRGO sheets, amorphous alloy ribbon, ethylene di-chloride, propylene oxide, cobalt matte, naphtha, wool fibres, inputs for manufacture of artificial kidney and disposable sterilised dialyser, and fuels for nuclear power plants.
The Finance Minister has also proposed some steps to prevent ‘bogus’ companies from availing undue concessions and export incentives.
“While we have intensified our efforts against such nefarious activities, provisions are being incorporated in the Act for enhanced penalty and prosecution for such offences,” Ms Sitharaman said. “Further, misuse of duty free scrips and drawback facility involving more than ₹50 lakh will be a cognisable and non-bailable offence.”
