Petrol rates have been increased by Rs. 2.45 a litre while Diesel will now cost Rs. 2.36 more for a litre. Following the hike,a litre of petrol will now cost 72.96 per litre in Delhi, while diesel will be sold at 66.69 per litre in the national capital. In Mumbai, petrol is being sold at Rs. 78.57 while in Kolkata it is retailing at Rs. 75.15 per litre.
The additional duty and cess on petrol and diesel will lead to a significant jump in revenue for the government, which is looking to contain its fiscal deficit to 3.3 per cent of GDP this year.
"Crude prices have softened from their highs. This gives me room to review excise duty and cess on petrol and diesel. I propose to increase special additional excise duty and road and infrastructure cess each one by 1 rupee a litre on petrol and diesel," Ms Sitharaman had said while announcing additional duty and cess on petrol and diesel.
The finance minister, however, dismissed suggestions that levies on petrol and diesel will fuel inflation, saying it was aimed at meeting public funding needs without hurting individual taxpayers and was also a step to move away from fossil fuels to electric vehicles.
Taxes on petrol and diesel, which account for more than a third of retail fuel prices, are one of the biggest sources of income for the government.
Usually, duties have been cut when global crude prices increased. But in recent years, the government has raised excise duty even when global prices fell.
In October last year, the government had to cut down on excise on fuel after a record, unrelenting rise in crude prices. The Centre also asked the state governments to match the cut. All BJP-ruled states had complied.
The low prices had continued through the assembly polls in the heartland states of Rajasthan, Madhya Pradesh and Chhattisgarh, and the staggered seven-phase general elections.