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Government defers plan to impose excise duty on unblended petrol and diesel

October 1, 2022

The levy will now be implemented from November 1 for petrol and April 1, 2023 for diesel

The government has deferred the plan announced in the Union Budget to impose an excise duty of ₹2 on unblended petrol and diesel from October 1, 2022.

The levy will now be implemented from November 1 for such petrol and for unblended diesel from April 1, 2023.

Union Finance Minister Nirmala Sitharaman had in her Budget for the fiscal year beginning April 2022 brought a ₹2 per litre additional levy on petrol and diesel that is not blended with ethanol and bio-diesel, respectively. This duty was to be applicable from October 1, 2022, but now has been differed to November 1.

Presently, 10% ethanol, extracted from sugarcane or surplus foodgrain, is blended or mixed in petrol (meaning 10% of ethanol mixed with 90 per cent of petrol) with a view to cutting oil import dependence and providing farmers with an additional source of income.

But there is only an experimental blending of bio-diesel, extracted from non-edible oilseeds, in diesel — the most used fuel in the country.

"Blending of fuel is a priority of this government. To encourage the efforts for blending of fuel, unblended fuel shall attract an additional differential excise duty of ₹2 per litre from the 1st day of October 2022," Ms. Sitharaman had stated in her Budget speech in the Lok Sabha on February 1.

In the September 30 notification, her ministry stated that "petrol which is intended for retail sale, not so blended with ethanol or methanol" will attract ₹3.40 per litre basic excise duty effective November 1, 2022, instead of ₹1.40 a litre currently.

Branded petrol, not doped with ethanol, will attract ₹4.60 a litre excise duty as against ₹2.60 currently.

In the case of diesel, it said the fuel "intended for retail sale, not so blended with alkyl esters of long chain fatty acids obtained from vegetal oils, commonly known as bio-diesels" shall attract ₹3.80 a litre basic excise duty instead of ₹1.80. Branded diesel will attract ₹6.20 a litre basic excise levy as against ₹4.20 currently.

[The Hindu]