More than half of what you pay for petrol is tax, duty and commission; here’s the breakup

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Published: July 30, 2019 3:03:39 PM

If tax, duty and commission are removed from the retail price of petrol and diesel, petrol can be available at just Rs 33.94 per litre and diesel can be sold at Rs 38.48 per litre in the fuel pumps of India.

petrol, diesel, crude, refinery, retail price, VAT, excise duty, dealer commission, dealer price, fuel costCentral excise duty of Rs 17.98 per litre, dealer commission of Rs 3.54 per litre and state VAT of Rs 14.98 per litre bring up the retail price of petrol to Rs 70.44 per litre in India. (Bloomberg image)

Petrol price in India has more of tax, duty and commission built in it, than the cost of crude and refining. If tax, duty and commission are removed from the retail price of petrol and diesel, petrol can be available at just Rs 33.94 per litre and diesel can be sold at Rs 38.48 per litre in the fuel pumps of India — less than half their prevailing retail prices. However, these are just the dealer price but the retail price has a long list of additions. “Public sector oil marketing companies take appropriate decision on pricing of petrol and diesel in line with international product prices and other market conditions,” Anurag Thakur, MoS, Ministry of Finance, said in a reply to a query in Lok Sabha.

Central excise duty of Rs 17.98 per litre, dealer commission of Rs 3.54 per litre and state VAT of Rs 14.98 per litre bring up the retail price of petrol to Rs 70.44 per litre in India, whereas the dealer price remained Rs 33.94 per litre as on 1st July 2019, according to the data provided in the reply.

Similarly, central excise duty of Rs 13.83 per litre, dealer commission of Rs 2.49 per litre and state VAT of Rs 9.47 per litre lift the retail price of diesel to Rs 64.27 per litre in India, whereas the dealer price remained Rs 38.48 per litre as on 1st July 2019. The overall tax incidence for the fuel in Delhi comes out as 46.8% for petrol and 36.3% for diesel.

On top of it, the government later imposed a further Rs 2 per litre as excise duty and cess on petrol and diesel prices, in Finance Minister Nirmala Sitharaman’s maiden budget 2019. The surcharge was levied with effect from the following midnight.

Question regarding the inclusion of petroleum products in GST has been repeatedly asked since the new tax system was introduced in July 2017. Finance Minister Nirmala Sitharaman replied in the lower house last month that inclusion of petroleum crude, petrol, diesel, natural gas and aviation fuel require recommendations from the GST council. And, no such recommendation has come yet from the GST council. Duties on petrol and diesel contribute a large portion of the government’s revenue. 

The breakup of taxes on petrol and diesel prices, as on 1 July 2019

Petrol: Retail price – Rs 70.44 per litre

  • Dealer price – Rs 33.94 per litre
  • Central excise duty –  Rs 17.98 per litre
  • Dealer commission – Rs 3.54  per litre
  • State VAT – Rs 14.98 per litre

Diesel: Retail price – Rs 64.27 per litre

  • Dealer price – Rs 38.48 per litre
  • Central excise duty –  Rs 13.83 per litre
  • Dealer commission – Rs 2.49 per litre
  • State VAT – Rs 9.47 per litre

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