Amid raging farmers’ protest on the outskirts of Delhi over the farm laws, the Modi Government on Monday proposed an Agriculture Infrastructure and Development Cess (AIDC) on certain items, including petrol, diesel, gold, alcoholic beverages, apples, Bengal Gram, some imported agricultural products to boost agriculture infrastructure by restructuring custom duties in the Union Budget 2021-22.
As per the Budget document, the agriculture cess of Rs 2.5 per litre has been imposed on petrol and Rs 4 per litre on diesel. The AIDC is a new cess introduced by the Government in the Union Budget 2021-22 which was presented in the parliament on Monday,
which seeks to shore up resources for improvement in agriculture infrastructure in the country.
However, prices for petrol and diesel won’t change because or reduction in other duties. Consequently, unbranded petrol and diesel will attract basic excise duty of Rs 1.4, and Rs 1.8 per litre respectively. Proposing the introduction of an agri infra development cess while presenting the Union Budget 2021-22 in Parliament, Finance Minister Nirmala Sitharaman said that it would not affect the consumers of most of these goods. The cess will be applicable with effect from February 2. Later addressing a press conference, Sitharaman said that a component to develop farm infrastructure has been added to the cost of petrol and diesel. “Consequent to imposition of Agriculture Infrastructure and Development Cess (AIDC) on petrol and diesel, basic excise duty and special additional excise duty rates have been reduced on them so that overall consumer does not bear any additional burden,” Sitharaman said.
To make up for the cess, basic excise duty on petrol has been revised to Rs 1.4 per litre from Rs 2.98 per litre and on diesel from Rs 4.83 per litre to Rs 1.8 per litre. Further, special excise duty has been brought down by Rs 1 per litre each on the two fuels to Rs 11 per litre on petrol and Rs 8 per litre on diesel. Prices of the two fuels have risen to all time highs in the last fortnight thanks largely to a steep hike in taxation by the Government in the last one year. Currently, a litre of petrol in Delhi costs Rs 86.30 per litre with excise duty which goes to the centre accounting for Rs 32.98 per litre and VAT, which goes to the state, accounting for another 19.92 per litre.
Taxes account for 61.3 per cent of the retail price of the fuel. On diesel, the Central Government pockets Rs 31.83 per litre as excise while State Government gets Rs 11.22 per litre as VAT.
Agricultural cess also applied on several other goods including a 100 per cent cess on alcoholic beverages, 2.5 per cent on gold, silver and dore bars, 17.5 per cent on crude palm oil, 50 per cent on Bengal gram/chick peas, 30 per cent on Kabuli channa, 35 per cent on apples, 40 per cent on peas, 20 per cent on sunflower oil, 40 per cent on peas and 20 per cent on crude soyabean, 5 per cent on specified fertilizer, 1.5 percent on coal, lignite and peat and 5 per cent on cotton — not carded or combed.
“I propose an Agriculture Infrastructure and Development Cess (AIDC) on a small number of items. However, while applying this cess, we have taken care not to put additional burden on consumers on most items,” FM Sitharaman said in her Budget speech.
While proposing the cess, Sitharaman also said that care has been taken not to put an additional burden on consumers on most items. “There is an immediate need to improve agricultural infrastructure so that we produce more, while also conserving and processing agricultural output efficiently, the minister said.
Consequent to the imposition of AIDC on petrol and diesel, the Basic Excise Duty (BED) and Special Additional Excise Duty (SAED) rates have been reduced them so that overall consumer does not bear any additional burden. Consequently, unbranded petrol and diesel will attract basic excise duty of Rs 1.4, and Rs 1.8 per litre, respectively. The SAED on unbranded petrol and diesel shall be Rs 11 and Rs 8 per litre, respectively. Similar changes have also been made for branded petrol and diesel.
As per the budget statement, basic customs duty rates have been cut on a range of items to offset the impact of the cess on consumers. These items include: apple (15%); alcoholic beverages (50%); crude edible oil (15%); coal, lignite and peat (1%); specified fertilisers (0%); ammonium nitrate (2.5%); peas, kabuli chana, Bengal gram, lentils (10%).