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Petrol prices cross Rs. 100/liter in Mumbai: How much tax do you pay per liter of petrol & diesel

After the state elections, the daily revision of the petrol and diesel prices have started again in India. Today, the price of petrol and diesel saw the 18th hike in this month. The fuel companies have increased the price of petrol by 26 paise and diesel by 30 paise. The cumulative hike for petrol is Rs 3.3 and diesel Rs 3.89 in the month of May. In Mumbai, petrol costs Rs 100.19 per litre while the price of diesel is Rs 92.17 per litre.  In the national capital Delhi, the price of petrol on 29th May is Rs 93.94 for petrol and Rs 84.89 for diesel. So how much tax do you pay when you buy fuel?

Petrol prices cross Rs. 100/liter in Mumbai: How much tax do you pay per liter of petrol & diesel

The retail price of the fuel has various components including a number of taxes. In fact, you pay much more taxes on the fuel compared to the base price. Below is a detailed chart that shows the components of prices of petrol and diesel fuels.

Below is the component calculation of the petrol price in Delhi as of 16th May 2021

Components of petrol Per litre price in Delhi (Rs)
Base price 34.19
Freight 0.36
Price charged to dealers (excluding excise duty and VAT) 34.55
Excise Duty 32.90
Dealer commission (Avg) 3.77
VAT (Includes tax on dealer commission) 21.36
Retail price (Rounded) 92.58

Below is the component calculation of the diesel price in Delhi as of 16th May 2021

Components Per litre price in Delhi (Rs)
Base price 34.19
Freight 0.36
Price charged to dealers (excluding excise duty and VAT) 34.55
Excise Duty 32.90
Dealer commission (Avg) 3.77
VAT (Includes tax on dealer commission) 21.36
Retail price (Rounded) 92.58

Explanation of the taxes

Petrol prices cross Rs. 100/liter in Mumbai: How much tax do you pay per liter of petrol & diesel

In the petrol prices of Rs 92.58 per litre, the base price is Rs 34.19 per litre. The central government charges 35.35% or Rs 32.90 per litre as ‘Excise Duty. The state govt in Delhi charges 23 percent or Rs 21.36, This tax charged by the state government differs and that is why the fuel prices are different across India. The government tax on petrol is Rs 54.26 or about 58.6% of the retail price.

In the case of diesel, which costs Rs 83.22 in Delhi, the central government taxes it at Rs 31.8 per litre or about 38.21% of the retail price. The state government takes Rs 12.19 or 14.64%. The cumulative tax on diesel is Rs 43.99 or 52.85%.

With such high taxes, the overall price of fuel in India remains on the higher side. The Indian government is pushing for alternative fuel in the country and is also trying to promote biofuel, which will reduce India’s dependency on fuel imports. India currently imports more than 82% of its fuel demand from foreign markets. With the use of alternative fuels and electric cars, that figure is likely to come down in the future.

The fuel price revision is done by the oil companies in India and not the central government.