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Budget 2025-26: CII calls for cut in excise duty on fuel, consumption vouchers to stir demand
Union Budget: CII recommends lowering excise duty on fuel to boost consumption, reduce inflation, and increase disposable income in its pre-budget suggestions for 2025-26. The proposal includes reducing marginal tax rates for incomes up to Rs 20 lakh and increasing benefits under key government schemes to enhance rural recovery.
New Delhi: Industry body CII in its budget suggestions for 2025-26 has recommended lowering the excise duty on fuel to boost consumption, especially at the lower income level, arguing that fuel prices significantly drive inflation. The budget could also consider reducing marginal tax rates for personal income up to Rs 20 lakh per annum. This would help trigger the virtuous cycle of consumption, higher growth and higher tax revenue, said CII.
Asserting that the gap between the highest marginal rate for individuals at 42.74 per cent and the normal Corporate Tax Rate at 25.17 per cent, is high, it said, inflation has reduced the buying power of lower and middle-income earners.
"The central excise duty alone accounts for approximately 21 per cent of the retail price for petrol and 18 per cent for diesel. Since May 2022, these duties have not been adjusted in line with the approximately 40 per cent decrease in global crude prices. Lowering excise duty on fuel would help reduce overall inflation and increase disposable incomes," the industry body said.
Chandrajit Banerjee, Director General, CII, said domestic consumption has been critical to India's growth story, but inflationary pressures have somewhat eroded the purchasing power of consumers.
"Government interventions could focus on enhancing disposable incomes and stimulating spending to sustain economic momentum. Persistent food inflationary pressures particularly impinge upon low-income rural households who allocate larger share to food in their consumption basket", he added.
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