Petrol and diesel prices in the country have been increasing since the last fortnight. Petrol in Delhi has become costlier by Rs 10 to Rs 105.41 per liter in the last 16 days, while diesel has become Rs 96.67 per liter. In Mumbai, petrol and diesel prices per liter are Rs 120.51 (an increase of 84 paise) and Rs 104.77 (an increase of 85 paise) respectively.
Prices in India vary from state to state due to variation in local taxes. Here are the details of taxes and other charges on petrol to be paid by the customer:
Duty break-up on petrol
The base price of petrol in Delhi is Rs 53.34 per liter. Above this, a freight charge of 20 paise is levied on each litre. These two components make up the dealer’s fee (excluding excise duty and value added tax) at Rs 53.54 per litre. Apart from this, excise duty is levied at the rate of Rs 27.90 per liter. There is also a Value Added Tax (VAT) of Rs 16.54 including VAT on dealers’ commission. The average dealers commission is Rs 3.83 per litre. According to a notification by Indian Oil Corp Ltd, the break-up is based on the retail price level as of April 1, when petrol was priced at Rs 101.81 per litre.
Details of Charges on Diesel
The base price of Diesel in Delhi is 54.87. It charges 22 paise. These two factors take the total price charged from dealers (excluding excise and VAT) to Rs 55.09 per litre. Further, in addition to VAT of Rs 13.26 (including VAT on dealers’ commission), an excise duty of Rs 21.80 is charged. The average dealer commission is Rs 2.58 per litre. According to the IOCL notification, the charge break-up of diesel is also based on the retail price of April 1, when it was 93.07 per litre.
Recent price hikes
Retail prices of petrol and diesel in India are linked to international crude oil prices. And, ever since Russia invaded Ukraine, global oil prices have remained high, halting global oil supplies.
After Russia approved a military operation in Ukraine on 24 February, Brent crude oil prices hit US$100 a barrel for the first time since 2014. In the following days, US WTI crude futures also touched USD 130.50 a barrel, its highest level. From July 2008, before retreating. Brent also touched a high of $139.13, which is also the highest level since July 2008.
The Center may choose to reduce the impact of higher crude oil prices on consumers by cutting excise duty on both petrol and diesel. Excise duty on petrol and diesel is levied by the central government, while VAT is levied by the state governments. When Center lowers rates on petrol, cuts excise duty; Whereas the state reduces the value added tax on petrol when it wants to reduce the prices. Apart from this, a cess of 1 percent is also levied on the price of petrol.
Change in prices across states and territories
The variation in the prices of petrol and diesel is due to two reasons – difference in freight rates and different VAT rates across states.
Freight charges depend on the distance between the refining plant and the petrol pump; The farther the petrol pump is from the oil refining unit, the higher will be the freight charges. Because of this, prices can vary from region to region.
Also, different states levy different VAT rates, due to which the prices vary from state to state. For example, the Odisha government levies 32 per cent VAT on petrol, while Uttar Pradesh 26.8 per cent VAT or Rs 18.74 per litre, whichever is higher.
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