New Delhi: In a significant fiscal move aimed at cushioning the impact of surging global crude oil prices, the Central Government on Friday reduced the Special Additional Excise Duty (SAED) on petrol and diesel by ₹10 per litre each.
Following the revision, the centre-imposed tax component has been brought down to ₹3 per litre on petrol, while diesel will no longer attract the special additional excise duty, effectively making it zero under this category.
However, industry insiders suggest that consumers may not see an immediate reduction in fuel prices at retail outlets, as the tax cut is expected to be largely absorbed by Oil Marketing Companies (OMCs) to compensate for mounting losses.
Oil Companies Facing Heavy Losses
According to industry estimates, OMCs are currently incurring losses of nearly ₹48.8 per litre on petrol and diesel sales. The losses have been driven primarily by the sharp spike in Brent crude prices, which recently crossed the $100 per barrel mark.
Global crude prices have surged amid geopolitical tensions, particularly the conflict involving the United States, Israel, and Iran, along with disruptions in energy shipments through the Strait of Hormuz, a critical global oil transit route.
Government Aims to Shield Consumers
Petroleum and Natural Gas Minister Hardeep Singh Puri stated that the government chose to reduce taxes instead of passing the entire burden of rising international oil prices on consumers.
In a detailed post on social media platform X, the minister highlighted the rapid rise in global crude prices.
He noted that international crude prices increased from around $70 per barrel to nearly $122 per barrel within a month, triggering fuel price hikes across several regions of the world.
According to the minister:
- Fuel prices rose 30–50% in Southeast Asia
- Around 30% in North America
- Nearly 20% in Europe
- Up to 50% in parts of Africa
Puri said the government faced two options—either significantly increase domestic fuel prices like many other countries or absorb the financial burden to protect Indian consumers from global volatility.
Duty Cut Comes After Private Retailer Price Hike
The excise duty reduction comes a day after private fuel retailer Nayara Energy increased petrol and diesel prices by ₹5.30 and ₹3 per litre, respectively.
Nayara Energy operates nearly 6,967 fuel stations across India, accounting for about 8.4% of the country’s fuel retail market, and is backed by Russia’s Rosneft and Kesani Enterprises.
Revised Central Tax Structure
With the latest changes, the total central excise duty on petrol has been reduced from ₹21.90 to ₹11.90 per litre, while diesel excise duty has fallen from ₹17.80 to ₹7.80 per litre.
Breakdown of Central Taxes on Petrol:
- Basic Excise Duty – ₹1.40
- Special Additional Excise Duty – ₹3 (earlier ₹13)
- Agriculture Infrastructure & Development Cess – ₹2.50
- Road and Infrastructure Cess – ₹5
Breakdown of Central Taxes on Diesel:
- Basic Excise Duty – ₹1.80
- Special Additional Excise Duty – ₹0 (earlier ₹10)
- Agriculture Infrastructure & Development Cess – ₹4
- Road and Infrastructure Cess – ₹2
Long-Term Reduction in Excise Duties
The central excise duty on petrol and diesel has declined steadily since May 2020, when it stood at ₹32.98 per litre for petrol and ₹31.83 per litre for diesel.
The latest reduction reflects the government’s continued efforts to balance fiscal pressures while managing the impact of global energy market volatility on domestic consumers.
