After excise cut on fuels, Siddaramaiah rules out sales tax reduction

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Even as the Union Budget 2018-19 proposed levy of road and infrastructure cess of Rs 8 per litre on petrol and diesel, while abolishing the additional excise duty of Rs 6, global prices pushed petrol to a almost three-and-a-half-year high of Rs 73.05 per litre in Delhi on Thursday. However, the minister then announced a new road cess of Rs 8 per litre, leading to no change in the petrol prices.

In the budget, the Modi government has chose to reduce the excise duty on petrol and diesel by taking big decisions. In Delhi, petrol price is Rs 73.10 per litre while diesel is Rs 64.11 per litre.

Finance Minister Arun Jaitley will present the current NDA government's fifth and arguably his toughest Budget yet as he seeks to address agriculture distress, create jobs and boost growth while at the same time stick to fiscal prudence.

The central government levies Rs 19.48 per litre excise duty on petrol and Rs 15.33 on diesel. This decision of the government will not provide any relief in the prices of petrol and diesel.

The petrol and diesel prices do not come under the GST.

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But what was supposed to be an helping hand for Indian citizen has now turned out to be a nightmare because petrol and diesel prices have remained unchanged since 2014.

This is an additional excise duty imposed on motor spirit is commonly known as petrol and high speed diesel.

With this reduction, the FM said the government will bear the revenue loss of Rs 13,000 crore in the remaining part of FY18.

"While this will not have any impact on the end-consumer since the net effect is the same due to the introduction of the cess, the move will benefit the Centre", said Pratik Jain, Leader of Indirect Tax at PwC India. Production curbs by the Organisation of the Petroleum Exporting Countries and high demand have led to the surge.

Firstly, the government earns substantial revenue from petro-products through taxation, as they have been kept out of the Goods and Services Tax (GST) regime. "Considering that the Union government wants to invest in development of the infrastructure sector, this cess will be an additional source of income for this goal", Mr. Jain added.