Petrol and Diesel Prices are on its High in India. Top 4 Reasons demystified for High Fuel Prices in India due to Excise, VAT, Refinery Margins, Dealer Commission impacting Indian Consumer
Petrol has breached in Rs 70 per Litre mark in Delhi and almost touching in Rs 80 per Litre in Mumbai. For People of Mumbai - Petrol Prices surpassing all previous highs
Diesel Price in Delhi is at Rs 58.6 per Litre, while in all other 3 Metro Cities - Mumbai, Chennai, Kolkata is above Rs 60 per Litre.
Despite of Developments
» Rupee Gaining Stronger against Dollar at its 2 year highs of Rs 63.9 against Dollar - down from its peak of Rs 69/$
» Crude Oil also at sub 50$ per Barrel - which is what Historical average, down from its peak of 147$/barrel
Wondering why are Fuel Prices so high in India - where in Petrol Prices are inching to mark new record of highs in Maharashtra and also are relatively very high in Other Cities - despite Crude Oil at a much lower level.
So much so - that Government has stopped 15 days Fortnight Price revision and now Fuel Prices are revised daily since 3rd July with Petrol Prices have silently been increased day by day and is near its peak highs in many Cities.
Wondering - what is are the Reasons for High Fuel Prices in India
1. Higher Excise Duty: Excise Duty on Petrol has increased by more than 120% and on Diesel by more than 400% in last 3 Years. Although the hike was done from November 2014 till December 2015. But this was one of the major reasons for ensuring that Fuel Prices remains high
Below is the quantum of Excise Duty
|Tax in November 2014||Tax in September 2017|
|Excise Duty on Petrol||Rs 9.20 per Litre||Rs 21.48 per Litre|
|Excise Duty on Diesel||Rs 3.46 per Litre||Rs 17.33 per Litre|
2. Higher VAT Duty: GST Framework does not apply on Petroleum Products. Unsure why ? But States charges a high VAT Duty on Fuel Prices. VAT is imposed on Gross Price inclusive of Excise. Means Tax on Tax.
Below are VAT Duty Framework as applied on Petrol which ranges from mere 6% to as high as 47.6% within India in Different States
Excise Duty Updated in September 2018
|States with Highest VAT on Petrol||VAT Duty||States / UT with Lowest VAT on Petrol||VAT Duty|
|Maharashtra - Mumbai, Pune||39.1%||Andaman & Nicobar Island||6.0%|
|Punjab||35.1%||Arunachal Pradesh, Tripura, Mizoram||20.0%|
|UT - Dadra nagar Haveli, Puducherry, Daman||20%|
Diesel although has some relaxation on VAT (as against Petrol) but on standalone basis has average VAT of 20% to 25% in most of the States. In Delhi – although its one among lowest at 16.75%+ 25 paise cess.
In Last 3 Years - VAT Duty is also been hiked by most of the states contributing to high Fuel Prices
3. Hike in Refinery and OEM Costing: The Refineries and OEM almost make up to Rs 9 per Litre as cost of processing, transportation, margins etc. This is increased considerably from Rs 6.8 per Litre to Rs 9 per Litre making it more than 30% hike in same in last 1 year
4. Increase in Petrol Pump Commission – Although Marginal but an increase in Petrol Pump Commissions from rs 2.42 per Litre (Petrol) / Rs 1.54 per Litre (Diesel) has increased to Rs 3.23 per Litre (Petrol) / Rs 2.17 per Litre (Diesel) in last 1 year. Although the amount in rupee terms is lesser, but in percentage terms – Commissions on selling Petrol and Diesel increased by more than 35% in last 1 year
Overall End Result: All this has Led to ensure that Fuel Prices remains High.
Do you know that Crude Oil Cost once processed and refined and converted to Final Petrol and Diesel along with even Transported to Fuel Stations - costs not even Rs 30 per Litre. Rest all are Taxes (except some small Dealer Commissions)
As in September 2017 - an Indian Consumer looking to fill Petrol and Diesel is paying up approximate Taxes
» Petrol - Rs 36 per Litre as Taxes in Delhi. Rs 46 per Litre as Taxes in Mumbai
» Diesel - Rs 27 per Litre as Taxes in Delhi. Rs 30 per Litre as Taxes in Mumbai
This is close to 55% in Petrol and around 45% in Diesel - which is one among highest in world
This all has led to High Fuel Prices. Hopefully - by now you would come to know the reason why Fuel Prices are high in India. In case you seek detailed Breakup of Petrol and Diesel Prices - refer on Fuel Price Calculation Sheet
Hopefully it answers your Dillemma of Reasons of High Petrol and Diesel Prices in India
Modi govt is looting by keeping tax of 26.50 while refined petrol will be available at 28. And crude just 17. And state govts looting 20 from us .
We should remember we are getting oil from U S that to the poorest quality of oil available ie shale oil. We have the best quality oil with our neighbhour Iran wonder why we ignore this close source of excellent quality oil (easy to refine), strange, Venezuala has also offered to sell oil to India for Indian Rupees this is the best offer have had our Govt should immediately increase imports of oil from Venezuela. Since they sell in Rupees it will also boost our exports. Hope the concerned people will take maximum advantage of this offer.
Central Government is charging excise duty of 75% of Base price, State government is charging 30-50% of VAT of Base price. and they are reducing in 1-2 rupees. Shame on Indian government. Shame on Indian Politics. Indian Government never Works to the Common people.
Don t you have any sense , it has said clearly that we are buying the crude oil for dollars not in rupees. So the price is so high as the Rupee value is deteriorating.But in recent advancements our govt is trying to buy it from Iran to avoid more cess. Think before you speak about the central govt.
BJP led Government has reduced VAT on petroleum products
1. Gujarat - 4% VAT Duty Cut, with it Gujarat is now 24.96%
2. Maharashtra - VAT reduced by Rs 2 on Petrol and Rs 1 on Diesel
3. Madhya Pradesh - VAT cut by 3% on Petrol and 5% on Diesel
Also been slashed in Karnataka
In near future - Uttar Pradesh, Uttarakhand also to slash in VAT on Petrol and Diesel