Petrol and diesel prices in India are at all-time high. Domestic fuel prices have increased drastically since the beginning of May. After a gap of 18 days, state-run oil marketing companies resumed daily revision of fuel prices on May 4, since then the price of petrol has increased by Rs 10.88 per liter and diesel by Rs 9.47.
In at least 19 states and union territories of the country – Maharashtra, Delhi, West Bengal, Tamil Nadu, Andhra Pradesh, Telangana, Rajasthan, Madhya Pradesh, Karnataka, Uttar Pradesh the price of petrol has crossed Rs 100 per liter level. . Haryana, Jammu and Kashmir, Odisha, Ladakh, Bihar, Kerala, Punjab, Sikkim and Nagaland.
Auto fuel price in India depends on international crude oil prices, rupee-dollar exchange rate. In addition, the central government and states levy various taxes such as excise duty and value added tax (VAT) on petrol and diesel. The dealer’s commission and freight charges are also added to the fuel price. It should be noted that petrol and diesel do not come under the purview of the Goods and Services Tax (GST).
Some of the states that charge the highest rate of VAT are Rajasthan, Telangana, Madhya Pradesh and Odisha, according to data presented in Parliament on July 19 by the Ministry of Petroleum and Natural Gas. These above states, as well as others, add on to a long line of other charges such as cess, additional taxes and surcharges on current fuel prices. The Minister of State for Petroleum and Natural Gas, Rameshwar Teli said in a written reply to the House, this further increases the fuel rates. On the other end of the spectrum, there are Union Territories (UTs), which have always levied low taxes on fuel. Arunachal Pradesh and Mizoram are among the least charged union territories.
Rajasthan has the highest tax with 36 per cent VAT along with an additional charge of Rs 1,500 per kiloliter of road development cess. Karnataka lags behind with 35 per cent sales tax. Telangana has a VAT charge of 35.20 per cent on the baseline fuel charge, while Odisha has a VAT charge of 32 per cent. At the lower end, there is no duty in terms of taxation on petrol rates in Lakshadweep. Andaman and Nicobar Islands charge a nominal 6 per cent VAT. Dadra and Nagar Haveli and Daman and Diu charge 20 per cent VAT on their petrol prices. Motorists in Arunachal Pradesh face a nominal 20 percent VAT. Meghalaya has a pollution surcharge of 20 per cent or Rs 15.00 per liter (whichever is higher) and 10 paise per litre.
The Center raised excise duty on petrol by Rs 13 and on diesel by Rs 16 between March 2020 and May 2020. Excise duty on petrol increased from Rs 19.98 per liter to Rs 32.9. Excise duty on diesel has been increased from Rs 15.83 per liter to Rs 31.8. Following this amendment, the central government’s tax collection on petrol and diesel increased by 88 per cent to Rs 3.35 lakh crore in FY21. Minister of State for Petroleum and Natural Gas Rameshwar Teli mentioned in the Lok Sabha that a year ago the collection was Rs 1.78 lakh crore. Minister of State for Finance Pankaj Choudhary said that the excise collection in April-June this year stood at Rs 1.01 lakh crore. However, this number includes excise duty on not only petrol and diesel but also ATF, natural gas and crude.
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