SRINAGAR: The petroleum sector continues to be one of the single largest contributors to India’s Consolidated Fund, with more than Rs 4.15 lakh crore flowing into the Central exchequer in 2024–25 alone, the government has told Parliament.
Official data tabled in the Rajya Sabha shows that despite reductions in excise duty and periodic price moderation, fuel-linked taxes and dividends remain a critical pillar of central revenues.
The disclosure came in a written reply to an unstarred question in the Rajya Sabha on December 15, 2025, on petrol and diesel pricing and the collection of central revenue. The question sought details of excise duty, cess and surcharge collections since 2020, the share of fuel taxes in total central revenue, and whether fuel pricing is used as a revenue-balancing tool. The response was given by the Ministry of Petroleum and Natural Gas.
According to figures provided by the Petroleum Planning and Analysis Cell, the total contribution of the petroleum sector to the Central exchequer stood at Rs 4,55,069 crore in 2020–21, rose to Rs 4,92,303 crore in 2021–22, declined to Rs 4,28,067 crore in 2022–23, marginally increased to Rs 4,32,394 crore in 2023–24, and stood at Rs 4,15,244 crore in 2024–25. These amounts include excise duty, customs duty, cess, GST components, royalties, corporate taxes, dividends from public sector oil companies and profit petroleum from exploration.
Excise duty on crude oil and petroleum products formed the largest component of this inflow, even after successive duty cuts. In 2020–21, excise collections stood at Rs 3,72,970 crore, declining to Rs 2,71,529 crore by 2024–25 following reductions announced in November 2021 and May 2022, which the government said were fully passed on to consumers. The ministry also pointed to a Rs 2 per litre cut in petrol and diesel prices by oil marketing companies in March 2024, and clarified that a Rs 2 per litre increase in excise duty in April 2025 was not passed on to retail consumers.
The data also illustrates how significant petroleum revenues are in the broader fiscal picture. In 2022–23, the petroleum sector accounted for about 18 per cent of the Centre’s total revenue receipts. This share declined to 16 per cent in 2023–24 and further to 13 per cent in 2024–25, even as absolute revenues from fuel remained above Rs 4 lakh crore annually. Over the same period, states derived between 7 per cent and 9 per cent of their total revenues from petroleum-related taxes, highlighting the sector’s importance across all levels of government finance.
Responding to concerns about the burden of fuel taxation on households, transport, agriculture and small businesses, the ministry reiterated that petrol and diesel prices are market-determined and linked to international product prices. It noted that India imports more than 85 per cent of its crude oil requirement, and pointed out that while global crude prices rose sharply from about USD 80 per barrel in November 2021 to USD 116 per barrel in June 2022, domestic petrol and diesel prices were moderated through duty cuts and pricing decisions by public sector oil marketing companies.
The government did not accept the characterisation of fuel taxation as a “silent mass tax”, nor did it indicate the existence of any automatic threshold-based pricing formula that would trigger tax reductions beyond a certain crude price level. Instead, it maintained that pricing and tax decisions are taken as part of broader fiscal and consumer-protection considerations.
Taken together, the parliamentary reply offers a rare consolidated picture of how petroleum taxes, duties and dividends feed into India’s Consolidated Fund. Even as the relative share of fuel revenues in total central receipts has declined in recent years, the numbers underline that petrol and diesel remain not just transport fuels, but a cornerstone of the country’s public finances.
