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Petrol & Diesel Tax in India: Understanding Central and State Taxes

Concern over rising fuel prices has long plagued a large portion of the Indian populace. Increases in fuel prices have an impact on practically every aspect of society. If you recently bought a car, you are most likely suffering the most from the increase in fuel prices. It is essentially the same for all bikers and car owners. The growing expense of owning a car also has an impact on the auto sector. In addition to the cost of fuel, consumers must also consider the cost of auto insurance, especially for four-wheelers since these policies are more costly. In this article, we will explain how much tax is applicable to petrol and diesel. We will also highlight the taxes levied by the Central and state governments.

Petrol and Diesel Tax in India: The Basics

In India, diesel tax is 50% of the fuel's retail value, but petrol tax is 55% of the retail price. In addition, state governments impose sales tax and Value Added Tax (VAT) at different rates. The main fees included in India's fuel pricing structure are as follows:

Base price
Excise tax
Dealer charges and commissions
Value Added Tax (VAT)

Crude oil pricing, dealer fees, and excise taxes are now the same throughout India. However, state-by-state variations in sales tax and VAT often result in different fuel prices.

Central and State Tax on Petrol and Diesel in India

In India, petrol and diesel are subject to taxes from both the federal and state governments. Excise duty is levied by the central authorities at rates of Rs. 19.90 and Rs. 15.80 per litre, respectively. All around the nation, this rate stays constant. In addition, state governments impose sales tax, VAT, and other levies. The prices of petrol and diesel fluctuate throughout India due to the tendency for these taxes to have different rates. The following table shows the state-specific taxes on petrol and diesel across India as of 2024.

State/UT	Taxes on Petrol	Taxes on Diesel
Andaman & Nicobar Islands	1% VAT	1% VAT
Andhra Pradesh	Rs.4 per litre VAT + 31% VAT + Rs.1 per litre Road Development Cess and VAT thereafter	Rs.4 per litre VAT + 22.5% VAT + Rs.1 per litre Road Development Cess and VAT thereafter
Arunachal Pradesh	14.50% VAT	7.00% VAT
Assam	23.45% VAT Rs.17.80 per litre (whichever is higher)	22.19% VAT Rs. 14.60 per litre (whichever is higher Rebate @ Rs.1.50 per litre to a maximum limit of Rs.14.60 per litre
Bihar	Rs.16.65 per litre 23.58% VAT (whichever is higher) 30% surcharge applicable on the VAT as irrecoverable tax	Rs.12.33 per litre 16.37% VAT (whichever is higher) 30% surcharge applicable on the VAT as irrecoverable tax
Chandigarh	Rs.12.42 per litre Rs.10 perKL cess + 15.24% VAT (whichever is higher)	Rs.5.07 per litre Rs.10 per KL cess + 6.66% VAT (whichever is higher)
Chhattisgarh	Rs.2 per litre VAT + 24% VAT	Rs.1 per litre VAT + 23% VAT
Dadra and Nagar Haveli, Daman and Diu	12.75% VAT	13.50% VAT
Delhi	19.40% VAT	16.75% VAT + Rs.250 per KL air ambience charges
Goa	21.5% VAT + 0.5% Green cess	17.5% VAT + 0.5% Green cess
Gujarat	13.7% VAT+ 4% cess on Town Rate and VAT	14.9% VAT + 4 % cess on Town Rate and VAT
Haryana	Rs.14.50 per litre 18.20% VAT (whichever is higher) + 5% additional tax on VAT	Rs.11.86 per litre 16.00% VAT (whichever is higher) + 5% additional tax on VAT
Himachal Pradesh	Rs.13.50 per litre 17.5% VAT (whichever is higher)	Rs.10.40 per litre 13.90% VAT (whichever is higher)
Jammu & Kashmir	24% MST+ Rs.2 per litre employment cess Rebate applicable up to Rs.4.50 per litre	16% MST+ Rs.1.00 per litre employment cess Rebate applicable up to Rs.6.50 per litre
Jharkhand	Rs.17 per litre 22% VAT on the sale price (whichever is higher) + Rs.1 per litre cess	Rs.12.50 per litre 22% VAT on the sale price (whichever is higher) + Rs.1 per litre cess
Karnataka	25.92% sales tax	14.34% sales tax
Kerala	30.08% sales tax + 1% cess (social security cess @ Rs.2 per litre) + Rs.1 per litre additional sales tax	22.76% sales tax + 1% cess (social security cess @ Rs.2 per litre) + Rs.1 per litre additional sales tax
Ladakh	15% MST + Rs.5 per litre employment cess (applicable reduction of Rs.2.5 per litre)	6% MST + Rs.1 per litre employment cess (reduction of Rs.0.50 per litre)
Lakshadweep	10% VAT	10% VAT
Maharashtra (Mumbai, Navi Mumbai and Thane)	25% VAT+ Rs.5.12 per litre additional tax	21% VAT
Maharashtra (Rest of State)	25% VAT+ Rs.5.12 per litre additional tax	21% VAT
Madhya Pradesh	29% VAT + 1% cess + Rs.2.5 per litre VAT	19% VAT + 1% cess + Rs.1.5 per litre VAT
Manipur	25% VAT	13.5% VAT
Meghalaya	Rs.13.50 per litre 13.5% VAT (whichever is higher) (including a Rs.0.10 per litre pollution surcharge)	Rs 9.00 per litre 5% VAT (whichever is higher) (including a Rs.0.10 per litre pollution surcharge)
Mizoram	16.36% VAT	5.23% VAT
Nagaland	Rs.16.94 per litre 21.75% VAT (whichever is higher)	Rs.12.83 per litre or 17.20% VAT
Odisha	28% VAT	24% VAT
Puducherry	14.55% VAT	8.65% VAT
Punjab	Rs.2050 per KL cess + Rs.14.32 per litre 15.74% VAT plus 10% additional tax (whichever is higher) + Rs.0.25 per litre (Special Infrastructure Development Fee) + Rs.0.10 per litre (Urban Transport Fund)	Rs.1050 per KL cess + Rs.10.02 per litre 12.00% VAT plus 10% additional tax (whichever is higher) + Rs.0.25 per litre (Special Infrastructure Development Fee) + Rs.0.10 per litre (Urban Transport Fund)
Rajasthan	29.04% VAT + Rs.1500 per KL road development cess	17.30% VAT + Rs.1750 per KL road development cess
Sikkim	20% VAT + Rs.3000 per KL cess	10% VAT + Rs.2500 per KL cess
Tamil Nadu	Rs.11.52 per litre + 13% VAT	Rs.9.62 per litre + 11% VAT
Telangana	35.20% VAT	27% VAT
Tripura	17.50% VAT+ 3% Tripura Road Development cess	10.00% VAT+ 3% Tripura Road Development cess
Uttarakhand	Rs.13.14 per litre 16.97% VAT (whichever is higher)	Rs.10.41 per litre 17.15% VAT (whichever is higher)
Uttar Pradesh	Rs.14.85 per litre 19.36% VAT (whichever is higher)	Rs.10.41 per litre 17.08% VAT (whichever is higher)
West Bengal	Rs.13.12 per litre 25% VAT (whichever is higher as sales tax) + Rs.1000 per KL cess – Rs.1000 per KL sales tax rebate (20% Additional tax on VAT as irrecoverable tax)	Rs.7.70 per litre 17% VAT (whichever is higher as sales tax) + Rs.1000 per KL cess – Rs.1000 per KL sales tax rebate (20% Additional tax on VAT as irrecoverable tax)

Breakup of Tax on Petrol and Diesel

Let us explain the tax breakup concept for petrol and diesel by taking the example of Delhi:

Price Elements	Petrol price (per litre as of 1st May 2024)	Diesel price (per litre as of 1st May 2024)
Price chargeable to dealers	Rs. 55.66	Rs. 56.42
Average dealer commission	Rs. 3.77	Rs. 2.58
Excise duty (levied by Central Government)	Rs. 19.90	Rs. 15.80
VAT (levied by State Government)	Rs. 15.39 per litre {19.4% of (price chargeable to dealers + Average dealer commission + excise duty)}	Rs. 12.82 per litre {16.75% of (price chargeable to dealers + Average dealer commission + excise duty)}
Retail selling price	Rs. 94.72	Rs. 87.62

The following table illustrates the prices of petrol and diesel in India without taxes:

Price Elements	Petrol price	Diesel price
Crude oil costs	Rs. 40 per litre	Rs. 40 per litre
OMC processing costs	Rs. 5.66 per litre	Rs. 6.42 per litre
Buffer for inflation	Rs. 10 per litre	Rs.10 per litre
Petrol price before tax	Rs. 55.66 per litre	Rs. 56.42 per litre

Reason for State-Wise Variation in Petrol and Diesel Prices

As you can see, the cost of fuel and diesel varies significantly across India's states. The obvious question here is why there is variation in prices across different states. You must first comprehend the Indian petrol and diesel price structure in order to get the rationale behind this. The diesel and petrol taxes in India (excise duty + VAT) are what cause differences in fuel pricing between states, even though the base price and dealer earnings are the same throughout. In India, tax on fuel, both petrol and diesel, is further bifurcated into central and state taxes. Although the unfavourable political climate has contributed significantly to the startling increase in fuel prices, state-level taxes on petrol and diesel in India have contributed to the price increase.

Conclusion

In India, the government imposes a diesel and gas tax to raise one-time money from the populace. These monies support the advancement of the country and are primarily utilised for developmental projects. Additionally, it is your responsibility as a responsible customer to be aware of these costs. Keep in mind that petrol stations are not permitted to overcharge you for the required state price. In order to make sure that you are being fairly charged while purchasing fuel, it is crucial that you are aware of these rates.

FAQ

Q1. How much is the percent tax on petrol in India?

In India, the whole selling price of fuel is currently subject to a 55% tax.

Q2. What is the tax on diesel in India?

Diesel is taxed by the central government at a rate of Rs. 15.80 per litre. State governments are also responsible for imposing sales tax and VAT, with varying rates typically applied.

Q3. How much is the central tax on petrol in India?

An excise tax of Rs. 19.90 per litre is imposed on petrol by the central government.

Q4. How much tax on petrol in Maharashtra?

The applicable petrol tax in areas like Mumbai, Navi Mumbai, Thane, and Aurangabad is 26% VAT plus an additional tax of Rs. 5.12 per litre. The petrol tax for the remainder of Maharashtra is 25% VAT plus an additional levy of Rs. 5.12 per litre.