There are also fiscal reasons behind the government’s persistent hikes in excise duty on petrol and diesel.
- Higher state taxes coupled with greater incidence of central excise duties has resulted in petrol becoming more expensive per litre than aviation turbine fuel (ATF).
- All fuels are subject to several taxes, resulting in their final market price being significantly higher than the price dealers pay for the fuel.
- One major reason for the mismatch between the prices of ATF, a highly refined fuel and petrol is the higher burden of central excise duties on the latter.
- Another reason for ATF enjoying lower excise duties than petrol or diesel is that aviation fuel can be freely imported.
- Hence, if the Indian government hikes the excise duty on ATF, airlines can simply import it from cheaper sources.
- Consumers of diesel or petrol don’t have any such option.