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State-wise Tax on Petrol and Diesel in India

  • Author :
  • TATA AIG Team
  • Published on :
  • 02/08/2022

Rising fuel prices have been a cause of worry for a long time among a major chunk of the Indian population. When fuel prices rise, almost all sectors of society get affected in some or the other way. Now, if you have recently purchased a vehicle, you are probably feeling the worst pinch of the fuel price hike. It is more or less similar for every car and bike owner.

The automobile industry is also hit by the rising cost of owning a vehicle. Not only the fuel price, but customers also need to worry about the motor insurance price, particularly 4-wheeler insurance as they are more expensive. Buying a car, maintaining it, and its running cost, everything together has made things extremely difficult for car owners and the auto industry.

How Do Fuel Price Hikes Impact Citizens?

The rising prices of petrol and diesel impact people in several ways. The initial impact of this hike is felt by people who own personal vehicles, especially those who use their cars or two-wheelers for daily commuting. Their monthly fuel expenses tend to increase and in turn, disrupt their monthly budget. As a result, they might have to cut down on other expenses to compensate for the hiked fuel prices.

Now, let’s talk about the indirect impact of the fuel price hike. As fuel prices go up, sales of cars and two-wheelers usually go down. This contraction in demand affects the automobile industry adversely. Apart from this, the rising fuel prices have a cascading effect on businesses belonging to various sectors. It’s because the cost of transportation and logistics starts to increase and therefore, their overhead costs for buying raw materials go up. As a result, their profit margins get reduced.

Consumers also face the burden of rising fuel prices as it causes the inflation rate to go up and hence, the prices of daily-use commodities – such as vegetables, oil, plastic, rubber, etc. – start going northwards.

Fuel Prices In Various States of India

At the time of writing this blog, the price of petrol in India is hovering around ₹100 in almost all major cities, including Delhi, Kolkata, Mumbai, Bengaluru, Chennai, and Hyderabad.

As of the 23rd of June 2022, petrol is trading at ₹96.72 per litre in New Delhi, ₹111.35 in Mumbai, ₹106.03 in Kolkata, ₹101.94 in Bengaluru, ₹102.63 in Chennai, and ₹109.66 in Hyderabad.

At the same time, diesel prices in India as of the 23rd of June 2022 stand at ₹89.62 per litre in New Delhi, ₹97.28 in Mumbai, ₹92.76 in Kolkata, ₹87.89 in Bengaluru, and ₹97.82 in Hyderabad.

To get fuel at cheaper rates, many people travel some extra miles to cross state borders and purchase fuel from the neighbouring state(s). Some reports have even indicated that a few people are trying to smuggle cheap petrol from neighbouring countries in an illegal manner.

The Reason Behind These Variations in Fuel Prices

As you can see, there are big differences between the petrol and diesel prices in different states of India. At present, petrol is available at the cheapest rate in India in Port Blair at ₹91.45 per litre. On the other hand, it is most expensive in Parbhani in Maharashtra at ₹123.47 per litre. The difference between the two prices is a hefty ₹32 per litre.

So, you might be wondering what can be the reason behind such sharp variations in fuel prices in different parts of India. To understand the reason behind this, you will need to first understand the price structure of petrol and diesel in India.

The fuel pricing structure in India mainly comprises four major charges:

  • The base price of the fuel
  • Dealer’s charges and commissions
  • Excise Duty, and
  • Value Added Tax (VAT)

While the base price and dealer’s profits remain the same all across India, it is the diesel and petrol tax in India (excise duty + VAT) that creates variations in fuel prices in different states. The fuel tax in India can further be divided into state tax and central tax.

It should be noted that the adverse geopolitical situation has a significant role to play in the astounding rise in the fuel price, but the state-wise tax on petrol in India, as well as on diesel, also took the price a few notches higher.

State-wise Tax on Petrol And Diesel in India

As mentioned, both States and the Central Government levy taxes on petrol and diesel in India. These taxes constitute around 55% of the total retail price of these fuels. However, taxes on petrol and diesel in India vary with each state. It’s because different states levy different sales taxes or Value-Added Taxes (VAT).

Below is a list of state-wise taxes on petrol and diesel in India:

State Tax on Petrol Tax on Diesel
Andaman and Nicobar Islands 6% 5%
Andhra Pradesh 31% VAT + ₹4 per litre VAT + Re. 1 per litre Road Development Cess 22.25% VAT + ₹4 per litre VAT + ₹1 per litre Road Development Cess
Arunachal Pradesh 20% 14.5%
Assam 32.66% or ₹22.63 per litre (whichever is higher) 23.66% or ₹17.45 per litre (whichever is higher)
Bihar 26% or ₹16.65 per litre (whichever is higher) 19% or ₹12.33 per litre (whichever is higher)
Chandigarh ₹10 per litre KL Cess + 22.45% VAT 14.02%
Chhattisgarh 25% VAT + ₹2 per litre 25.81% VAT + ₹2 per litre
Dadra and Nagar Haveli 20%
Delhi 30% 16.75% VAT + ₹250 per kiloliter air ambience charges
Goa 27% VAT + 0.5% Green Cess 22% VAT + 0.5% Green Cess
Gujarat 20.1% VAT + 4% Town Rate Cess
Haryana 25% or ₹15.62 per litre + 5% additional VAT
Himachal Pradesh 25% or ₹15.50 per litre (whichever is higher)
Jammu & Kashmir 24% MST + ₹5 per litre Employment Cess
Jharkhand 22% or ₹17 per litre + Re. 1 per litre Cess
Karnataka 35%

To Conclude

We’ve simplified the tax structure levied by Governments on petrol and diesel. It is crucial to note that the central and state tax on petrol in India keeps on changing from time to time. It’s because Governments revise their tax structure on fuels to maintain their revenues and decrease the pressure on consumers.

As a car owner, you need to know these details. Additionally, it is also important to procure a comprehensive car insurance policy to protect your vehicle from mishaps and damages. With Tata AIG, you can buy car insurance online from the comforts of your home. A Tata AIG car policy online comes with many benefits. The insurance claim process is simple and fast. Further, we have 7500+ network garages offering cashless services.

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