The central government on Monday, April 7, 2025, increased the excise duty on petrol and diesel by Rs 2 per litre, according to a circular issued by the Ministry of Finance. The revised rates will come into effect from today, April 8, 2025.
As per the notification, the excise duty on petrol has been raised to Rs 13 per litre, while the duty on diesel now stands at Rs 10 per litre.
However, despite this tax hike, the government has confirmed that consumers will not see any change in the retail prices of petrol and diesel. The Ministry of Petroleum and Natural Gas stated that public sector oil marketing companies (OMCs) will absorb the increase in excise duty and will not pass it on to consumers.
“PSU Oil Marketing Companies have informed that there will be no increase in retail prices of #Petrol and #Diesel, subsequent to the increase effected in Excise Duty Rates today,” the ministry said in an official statement posted on X (formerly Twitter).
Global Oil Prices Influence Policy
The decision to raise the tax without affecting end-user prices comes at a time when international crude oil prices have dropped significantly, hovering around $60 per barrel. Industry experts had earlier anticipated a retail price cut in response to declining global rates.
However, the government has opted to increase excise duty instead, a move seen as a way to recover additional revenue while keeping consumer prices unchanged. According to analysts quoted by PTI, the drop in global oil prices provided a cushion that allowed the government to increase taxes without burdening the public.
Minister Puri Assures: No Price Hike for Consumers
Union Minister for Petroleum and Natural Gas Hardeep Singh Puri addressed the matter in a press briefing on Monday, stating that there would be no increase in fuel prices at this time.
“Let me clarify upfront and on the record — this increase will not be passed on to the consumer,” he said.
Puri explained that oil marketing companies typically maintain inventories that last up to 45 days, giving them the flexibility to manage short-term tax or price fluctuations without changing the retail rates.
He further said that fuel prices in India operate under a deregulated regime, where prices are aligned with global trends.
“You can legitimately expect prices of petrol and diesel to be moderated by the oil marketing companies in keeping with the global price. In a deregulated sector, you can expect them to accordingly adjust the market retail price,” he said.
Possible Adjustments in the Future
While retail prices will remain stable for now, the minister suggested that there could be future adjustments depending on the movement of international fuel prices.
“As we go forward from here, gas prices across the world are expected to come down,” Puri added. “If that happens, oil companies will make the necessary adjustments in fuel pricing.”
The excise duty on petrol has been raised to Rs 13 per litre and on diesel to Rs 10 per litre, effective from April 8, 2025. Despite the hike in excise duty, retail prices for both fuels will remain unchanged, as the impact is expected to be offset by a recent drop in global oil prices. The government has assured that this move will not place any additional burden on consumers.
