Petrol price down by ₹ 2.50 a litre, diesel by ₹ 2.25

The Petrol price was on Wednesday cut by ₹ 2.5 a litre and diesel by ₹ 2.25 following a reduction in excise duty on auto fuels.

Petrol in Delhi now costs ₹ 68.38 a litre, down from ₹ 70.88. A litre of diesel will now cost Rs. 56.89, against ₹ 59.14 previously, according to Indian Oil Corporation (IOC).

On Tuesday, the government cut the excise duty on petrol and diesel by ₹ 2 a litre each 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 was higher after factoring in its impact on the VAT.

As things stand, excise duty is levied on fuel produced ex-refinery. Local sales tax or the 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 ₹ 15.07, while on Wednesday it stands at ₹ 14.54. On diesel, the VAT on Wednesday is ₹ 8.41, against ₹ 8.73 previously.

The excise duty cut paused the relentless rise in rates witnessed since July 4. While the petrol prices increased by ₹ 7.8 to reach ₹ 70.88 a litre in Delhi on Tuesday, the highest since August 2014, the diesel rates rose by ₹ 5.7 to touch an all-time high of ₹ 59.14.

The excise duty cut would cost the government ₹ 26,000 crore in annual revenue and about Rs 13,000 crore in the remaining part of the current fiscal year that ends on March 31, 2018, the government said on Tuesday.