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Old 6th May 2020, 11:56   #181
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Originally Posted by ABHI_1512 View Post
We all know that petroleum and alcohol were deliberately kept out of the GST net because the states did not want to let go of the earnings of the cash cows. But even then, the hiking of excise duties to the levels unheard of till date is just not fathomable. The states will off course try to shore up their finances since they are short of revenue from other fronts .
All the state governments combined gets 42 percent of "basic" excise duty. For the last few years centre govt is increasing the additional/ special excise duty only. State governments get nothing or zero percent of special excise duty. So in effect, centre govt gets full revenue of this special excise duty increase and state govt gets zero paisa. States even lost the opportunity to hike the VAT since there is no decrease in fuel prices

Quote:
Originally Posted by DigitalOne View Post
Some facts which many in this forum seem to be completely unaware of.

Fuel Taxes in India constitute:

1. Excise - Collected by Central Govt
2. VAT - Collected by State governments.

VAT is on % basis on top of Base Price + central Excise. Which means if Center increases Excise, the states collection of VAT goes up automatically, even if they don't do anything.
If there was no special excise duty increase by central govt, diesel prices will decrease by Rs.13. Then state govt can increase the diesel price for some amount (say Rs.5) so that they get much more revenue.

Last edited by vb-saan : 6th May 2020 at 18:53. Reason: Back to back posts merged.
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Old 6th May 2020, 12:17   #182
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Re: Crude oil prices crash, but India refuses to slash fuel prices

Govt. hikes excise duty on petrol & diesel by up to Rs. 13/lt

The government of India has increased the excise duty on petrol and diesel by Rs. 10 and Rs. 13 per litre respectively.

Crude oil prices crash, but India refuses to slash fuel prices-31petrol2.jpg

It has been reported that the hike in excise duty will not affect retail prices of the fuels as state-owned oil companies will adjust them against the fall in crude oil price.

Special additional excise duty on petrol has been increased by Rs. 2 per litre, while road cess has gone up by Rs. 8 per litre. As a result, the total excise duty on petrol has risen to Rs. 32.98 per litre.

The special additional excise duty on diesel has been hiked by Rs. 5 per litre and the road cess is up by Rs. 8 per litre. The total excise duty on diesel is now Rs. 31.83 per litre.

Source

Link to Team-BHP News
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Old 6th May 2020, 12:24   #183
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Re: Crude oil prices crash, but India refuses to slash fuel prices

Quote:
Originally Posted by anb View Post
All the state governments combined gets 42 percent of "basic" excise duty. For the last few years centre govt is increasing the additional/ special excise duty
The funny part is, yesterday’s hike consists of a road cess component of ₹8- both for petrol and diesel.
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Old 6th May 2020, 12:31   #184
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Re: Crude oil prices crash, but India refuses to slash fuel prices

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Originally Posted by anb View Post
Some state government do protest but will not come in news papers . If there was no special excise duty increase by central govt, diesel prices will decrease by Rs.13. Then state govt can increase the diesel price for some amount (say Rs.5) so that they get much more revenue.
Maybe a few state governments do protest but mostly they don't. For an increase of Rs 10 in central excise, the states get an additional rs 2 to rs 3 (assuming state VAT 20% to 30%), and no blame on top of that.
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Old 6th May 2020, 12:48   #185
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Re: Crude oil prices crash, but India refuses to slash fuel prices

Some comments above are amazing. Looks like the special packages which were rolled out are forgotten! All these come at cost, as they say there are no free lunches!
Some jokers in Karnataka were exhorting the State government to open up the liquor shops. The same are shouting foul today. However opening up the liquor shops meant that state Government is now getting some much needed tax revenues.

There are absolutely no avenues for any Government to earn money. The rich and Powerful always arm twist their way and have means to earn black money. The so called "farmers" have "voting" and "mass" power to earn the freebies for life!
Coporates demand SEZs else they will not set shop in India, which means un employment. So this is a vicious circle.

Even though I pay a huge part of my salary as income tax, I still have to pay GST, VAT and what not! But the reality in India is what has been done historically cannot be undone so easily due to "democracy".
Lastly, I see no avenue for respite to this other than being "part" of the system or "escaping" the system.
Since the nature is "Capitalistic" in general, every organization is now out to shore up the purses!

Last edited by MCR : 6th May 2020 at 12:51.
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Old 6th May 2020, 12:48   #186
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Re: Crude oil prices crash, but India refuses to slash fuel prices

It doesn't matter. After all, it's tax payer money any way you look at it. Take from one hand, give it to the other. Increase levies on fuel, spend it on subsidies elsewhere.
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Old 6th May 2020, 13:44   #187
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Re: Crude oil prices crash, but India refuses to slash fuel prices

Here are some numbers -

Fuel price break up. Source.

Crude oil prices crash, but India refuses to slash fuel prices-fuel-breakup.jpg

Brief research on a barrel of fuel.

One barrel of fuel = 159 liters of oil (approx).
Cost Per Barrel, assuming 75INR = 1USD
At $35 / Barrel = 2,625 INR
At $45 / Barrel = 3,375 INR
At $55 / Barrel = 4,125 INR

With one barrel of oil, you can produce all the below:
- 73 liters of petrol
- 36 liters of diesel
- 20 liters of jet fuel and heavy fuel
- 6 liters of propane
- 34 liters of other products (Butane, Asphalt, Sulphur)

Using the above, you can make your own calculations - permutations and combinations of costs. I do not know the exact price and uses of propane and other byproducts. So cannot fully comment.

Below graph shows, that after 2014, crude oil prices has mostly resulted in a drop. Added to that, fuel subsidies (on petrol was removed before 2014) on diesel were removed after 2014. Essentially, government did not have to pay subsidy + increased taxes + pocketed the gains from falling crude oil prices.

Crude oil prices crash, but India refuses to slash fuel prices-crue-oil-price-fuel-price.jpg

We now achieve a wonderful distinction of world's highest taxes on fuel prices. Cheers to that!

Crude oil prices crash, but India refuses to slash fuel prices-highest-tax-rates.jpg

Source for above two graphs.

Now, the scary part. Something that worries me. After the lows that crude oil prices tested about 10 days ago, oil prices are going up and are recovering. Indian retail price is calculated based on 15 day average of crude oil prices. Now, when the low point of USD $19- $20 goes out of that range, i.e, say by May 15th on wards, and if fuel prices stay at current level (currently at $32), or worse still increase beyond $32; the average price for last 15 days will go up. Meaning, retail price of fuel will go up. So the sweetener on the bitter bill of duty hike, will start to wane. But, most of us will forget and move on in life.

Crude oil prices crash, but India refuses to slash fuel prices-oil-price-increase.jpg
Source.

Now, few questions -
1. Are we fine paying almost 70% of something that we buy regularly as taxes? And not even ask a question about it?
2. Is there an upper cap on retail prices of fuel? Or we just cough up whatever is asked for?
3. During times of economic depression, which India is undergoing, (lockdown further pushed India to bigger challenges); economists, industrialists, commoners and market participants argue for increase in spending capabilities of populations. This is to revive demand. During such a scenario, sucking more money out of everybody's pockets - is it prudent?
A former Harvard economics professor, who has co authored multiple research papers, and is also present government's MP in Rajya Sabha thinks No.
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Old 6th May 2020, 16:15   #188
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Re: Crude oil prices crash, but India refuses to slash fuel prices

Note from Support - We are not here to discuss politics. No more off-topic posts please.
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Old 6th May 2020, 18:59   #189
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Re: Crude oil prices crash, but India refuses to slash fuel prices

Note from Support: Thread has run its course, so is temporarily closed.
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