Budget 2019: Your fuel bill may go up by around Rs 2.5 per litre, thanks to cess, duty

The fuel prices for your vehicle will now get dearer by over Rs 2 per litre as the government has announced an increase in special additional excise duty (SAED) as well as road and infrastructure cess — both by Rs 1 each — on petrol and diesel. Post local sales tax or value-added tax (VAT), which is charged after adding central excise duty on base price, the increase in petrol and diesel price could be well around Rs 2.5, experts said. The analysts are of the opinion that the increase in automobile fuel will have a direct impact on inflation, which may see a rise.

FM Nirmala Sitharaman in her maiden budget said the crude prices have softened from their highs, which has given her the room to review the excise duty and cess on the automotive fuel.

Presently, government takes Rs 7 per litre of SAED petrol and Rs 1 per litre on diesel. However, the road and infrastructure cess is charged Rs 8 per litre on both petrol and fuel, claim industry insiders.

The Budget Estimates provide an amount of Rs 37,478 crore as petroleum subsidy for 2019-20, compared to Rs 24,833 crore in revised estimates of 2018-19. Out of the above, Rs 32,989 crore is earmarked for LPG subsidy while Rs 4,489 crore have been allocated for kerosene subsidy.

According to K Ravichandran, Sr. VP & Group Head, Corporate Ratings at ICRA, there may be a shortfall of around Rs 310 billion in fuel subsidy for FY 2019-20 versus subsidy provided of Rs 335 billion for FY2019-20. This is largely on account of opening arrears of Rs 330 billion, which the government had not paid to OMCs on account of under provisioning of subsidy.