New Delhi: Petrol price was on Wednesday cut by Rs 2.5 per litre and diesel by Rs 2.25 following the reduction in excise duty on auto fuels.
Petrol in Delhi now costs Rs 68.38 a litre, down from Rs 70.88. A litre of diesel now comes for Rs 56.89 as against Rs 59.14 previously, according to Indian Oil Corp (IOC), the nation's largest fuel retailer.
The government had cut excise duty on petrol and diesel by Rs 2 per litre each on Tuesday to moderate the relentless rise in fuel prices over the last three months.
IOC Director (Finance) A K Sharma said the cut in retail selling price is higher after factoring in its impact on VAT.
As things stand, excise duty is levied on fuel produced ex-refinery. Local sales tax or VAT is levied on the total of ex-refinery cost plus excise duty and commission paid to dealers.
So, till Tuesday the VAT on petrol in Delhi was Rs 15.07 while on Wednesday it stands at Rs 14.54. On diesel, VAT on Wednesday is Rs 8.41 per litre as against Rs 8.73 previously.
The excise duty cut paused the relentless rise in rates witnessed since July 4. While petrol prices had increased by Rs 7.8 to reach Rs 70.88 a litre in Delhi on Tuesday, the highest since August 2014, diesel rates had risen by Rs 5.7 to touch an all-time high of Rs 59.14.
The excise duty cut would cost the government Rs 26,000 crore in annual revenue and about Rs 13,000 crore during the remaining part of the current fiscal year that ends on March 31, 2018, the government had said on Tuesday.
The government, which had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices, has been criticised for not cutting excise duty despite a sustained rise in fuel prices since early July.
In all, duty on petrol was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped government's excise mop-up more than double to Rs 2,42,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.
While the costliest petrol was sold in September 2013 when it was priced at Rs 76.06 a litre in Delhi, the previous highest rate for diesel was also during the BJP rule in September 2014 when it was priced at Rs 58.97 per litre.
On petrol, excise has been cut to Rs 19.48 per litre from Rs 21.48 per litre and on diesel to Rs 15.33 a litre from Rs 17.33 previously.
The rise in petrol and diesel prices also reflected in wholesale price inflation, which increased to 3.24 per cent in August 2017, as compared to 1.88 per cent in July.