Total tax on petrol down to 50%, diesel to 40% after duty cuts

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Following a reduction in excise duty by the government, the overall incidence of taxes on petrol has decreased to 50% and that on diesel to 40%, with a marginally greater share in states that have also cut local sales tax or VAT on the fuel.

After adding central excise, dealer commission, and value-added tax (VAT) to base oil prices, the retail price of petrol and diesel is determined. The current international benchmark rate plus freight is the basic oil price.

Prior to the tax cuts, central excise of Rs 32.90 per litre and 30% VAT in Delhi accounted for 54% of the retail selling price of diesel on November 1, according to price build-up of the fuel available from state-owned fuel retailers.

After a Rs 5 per litre reduction in excise duty, this has dropped to 50% in Delhi.

Two dozen states and UTs have reduced their VAT to reflect the central government’s excise cutbacks. Furthermore, in some states, the tax percentage in the retail price will be slightly lower. The VAT in Delhi has not yet been reduced.

Similarly, the overall incidence of taxation in Delhi was 48 percent due to the central excise duty of Rs 31.80 per litre, 16.75 percent VAT, and air ambience costs of Rs 250 per kilolitre.

After a Rs 10 per litre reduction in excise duty, this has dropped to 40% in Delhi. The incidence will be significantly lower in circumstances when VAT has been reduced.

The base price, which covers the cost of oil as well as freight, ranges from Rs 52.01 per litre in Chennai to Rs 59.89 per litre in Ladakh. In addition, the central government levies a Rs 27.90 excise fee, which is collected at the factory gate (refinery in this case). Following that, state governments impose various rates of local sales tax or VAT.

Rajasthan has the highest petrol VAT (Rs 30.51 per litre), followed by Maharashtra (Rs 29.99), Andhra Pradesh (Rs 29.02), and Madhya Pradesh (Rs 29.02). (Rs 26.87). Andaman and Nicobar has the lowest VAT rate of Rs 4.93 per litre.

Diesel prices range from Rs 52.13 per litre in Chennai to Rs 59.57 per litre in Ladakh. In addition, the central government levies a Rs 21.80 excise levy. Andhra Pradesh has the highest VAT rate of Rs 21.19 per litre, followed by Rajasthan at Rs 21.14 and Maharashtra at Rs 20.21. The lowest VAT rate is Rs 4.40 per gallon in Himachal Pradesh, and Rs 4.58 in Andaman and Nicobar. The commission paid to petrol pump sellers is Rs 3.85 per litre for petrol and Rs 2.58 for diesel.

From Ladakh to Puducherry, BJP-ruled states and Union Territories have slashed petrol and diesel prices by as much as Rs 8.7 per litre and Rs 9.52 per litre after matching the central government’s promise of a cut in excise duty with a reduction in VAT.