Excise duty helps fill Centre’s fiscal gap
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What is the News?

According to the data from the Controller General of Accounts (CGA), Excise duty mostly from petrol and diesel has helped the government overcome a major gap in its revenue in FY21.

How much tax do we pay on petrol and diesel?
    • The Union government levies excise duty and cess on fuel and states levy a value-added tax(VAT).
    • Taxes together constitute 58% of the retail selling price of petrol and around 52% of the retail selling price of diesel at present.
How much did the Centre earn on excise duty from Petrol and Diesel?
    • The receipts from excise duty collected mostly from petrol and diesel has increased by almost 63% to ₹3.89 trillion in FY21 from the year-ago period.
    • Moreover, the sharp rise in excise duty receipts has also helped to boost overall tax collections.
What about GST and Direct Taxes?
    • The receipts from goods and services tax (GST) revenue has reduced by 7.6% in FY21 to ₹4.56 trillion.
    • On the direct tax side, the share of corporate tax collections in the Centre’s gross tax receipts too declined in FY21 from a year ago while that of personal income tax remained more or less the same.

Why has Excise Duty from Petrol and Diesel became a major revenue for the Government?

    • The government of India has given full tax rebate to those with taxable incomes of up to ₹5 lakh and revamped the tax slab system to offer a flexible alternative plan to those who do not avail of tax incentives.
    • In addition, businesses not availing incentives and new factories were offered a concessional tax rate regime.
    • Hence, due to this collection of excise duty from Petrol and Diesel has become the preferred revenue source for central and state governments.

Source: Livemint

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