Finance Minister Nirmala Sitharaman proposed ₹An excise tax of 2 liters per liter on unmixed fuels from 1 October during her Budget 2022 speech on Tuesday.
Petrol and diesel prices across the country have stabilized for some time after a pause in daily price adjustments. However, everything will change in a few months when the Center’s proposal to raise the price in the form of excise tax on unadulterated fuel. This will lead to a ₹Increase 2 times per liter for diesel engines.
During the presentation of the Union Budget 2022, Finance Minister Nirmala Sitharaman proposed ₹An excise tax of 2 liters per liter on unmixed fuels from October 1. “Fuel blending is a priority for this Government. To encourage fuel blending efforts, unmixed fuels blending will levy a different excise tax. ₹2 per liter as of October 1, 2022,” Sitharaman said during her Budget speech at Lok Sabha.
The reason why gasoline evades this excise tax is that currently 8.5% ethanol is blended or mixed into gasoline to reduce petroleum imports. Blended gasoline is now available in nearly 80% of the country. For the rest of the region, there will be a push from oil companies to buy ethanol to mix with gasoline. Even so, according to industry experts, the next few months may not be enough to cover the entire country.
Last year, the Center announced a goal of achieving a 20% ethanol-gasoline blending ratio by 2025 to reduce dependence on expensive oil imports. It also aims to achieve 10% ethanol blending by the end of the year.
Tarun Bajaj, Revenue Minister, said, “We’ve also been collecting data on what’s not blended and this is what drives petrol companies to make sure they do the blending. Look forward to that. Our wish is not to collect taxes because it would be very minimal. The wish is that mixing happens and to some extent it benefits the country.”
Currently, places like the Northeast and Jammu & Kashmir and a few other places in the South and Rajasthan do not have a supply of ethanol-blended gasoline. While blended gasoline may be available in Rajasthan and southern parts of the country in October, the North East may have to wait longer and pay a premium for the gas.
Diesel, on the other hand, won’t regret the impending price hike. Diesel blending in India is still at an experimental level. Instead of ethanol, inedible oilseed extract was used as an experiment for blending in diesel.
Date of first publication: February 2, 2022, 09:52 AM IST