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Without VAT petrol could cost INR 8 – 10 less, EXORBITANT TAXES

The price of fuel has touched INR 90.34 per litre for petrol while diesel is on sale at INR 80.51 per litre in Mumbai. The main reason for the skyrocketing fuel prices is due to that fact that the government is still levying value-added tax (VAT) for a certain crisis.

As per sources, the base diesel price is INR 29.01 meanwhile the base price for petrol is INR 28.03 and after all the additions like freight, excise duty, dealers’ commission, VAT, additional VAT and tax collected at the source the final price reaches INR 90.34 for petrol and INR 80.51 for diesel. It is to be noted that the base price of diesel is costlier but the added taxes for petrol makes it costlier than the diesel in the final price.

There are rumours that the government is still levying the tax for a crisis which are already over and as per calculations had the government removed those taxes the fuel price would drop down by INR 8 or so. The rates also differ between retail outlets of different oil companies. The price is lower in the fuel stations outside the municipal limits due to lower VAT being levied. The basic VAT is charged at 26% on petrol within the municipal area limits and 25% outside. It is 24% and 21% respectively for the diesel fuel though the additional VAT is the same.

The latest tax imposed by the government is for the Covid. Currently, the government imposes INR 2.12 as Covid tax. There was a slight dip in the price for fuel in September-October though since then, the prices have only gone up. If we compare the fuel price as compared to last year, Mumbaikars are paying 11% more and Delhites are paying about 10.35% extra.

The petrol and diesel prices vary in each state because the state government levy certain taxes particular to that region, like in Nagpur the integrated road development cess of 65 paise on petrol and INR 1.85 on diesel is imposed. The taxes could increase further as the government obtained the parliamentary approval to increase the special excise duty on diesel by INR 12 and on petrol by INR 18. The earlier limit was INR 12 for diesel and INR 10 for petrol.

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AnantaSaranNayak