InvestorQ : Why have excise duties collections in the current fiscal year surged so sharply compared to last year?
diksha shah made post

Why have excise duties collections in the current fiscal year surged so sharply compared to last year?

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Dhwani Mehta answered.
1 month ago
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The Excise duty collections have jumped sharply higher in the first eight months of the Apr-Nov 2020 period. Actually, the excise collections were up by 48%, largely led by a spike in excise collections on petrol and diesel. It may be recollected that when GST was introduced in 2017 the government had subsumed excise duty into GST.

However, some of the products like alcohol, petrol, diesel etc were kept out of the ambit of GST and they continued to attract excise duties as before. The idea then was to accommodate the aspirations of the state governments. Incidentally, in the last five years, the government has aggressively hiked excise duties on oil to boost revenues.

Excise duty during the first 8 months of fiscal 2020-21 stood at Rs.196,342 crore compared to collections of Rs.132,899 crore in corresponding period last fiscal year 2019-20. This is a jump in excise duty collections of nearly 48% YOY. This is despite that during these 8 months only 44.9 MT of diesel were sold compared to 55.4 MT last year. Petrol was a similar story.

The real reason likes in the aggressive spike in the rates of excise duties of petrol and diesel. During the year 2020, the excise duty was raised by Rs.13/litre on petrol and Rs.16/litre on diesel. This hike was done in two tranches and the whole idea was for the government to make the best of the sharp fall in crude oil prices globally to enhance revenues.

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