Petrol & Diesel Tax in India: Understanding Central and State Taxes
Updated: Nov 27
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.
Table of Contents:
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 |
(whichever is higher) |
Rebate @ Rs.1.50 per litre to a maximum limit of Rs.14.60 per litre |
Bihar |
(whichever is higher) 30% surcharge applicable on the VAT as irrecoverable tax |
(whichever is higher) 30% surcharge applicable on the VAT as irrecoverable tax |
Chandigarh |
(whichever is higher) |
(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 |
(whichever is higher) + 5% additional tax on VAT |
(whichever is higher) + 5% additional tax on VAT |
Himachal Pradesh |
(whichever is higher) |
(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 |
(whichever is higher) + Rs.1 per litre cess |
(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 |
(whichever is higher) (including a Rs.0.10 per litre pollution surcharge) |
(whichever is higher) (including a Rs.0.10 per litre pollution surcharge) |
Mizoram | 16.36% VAT | 5.23% VAT |
Nagaland |
(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 |
(whichever is higher) + Rs.0.25 per litre (Special Infrastructure Development Fee) + Rs.0.10 per litre (Urban Transport Fund) |
(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 |
(whichever is higher) |
(whichever is higher) |
Uttar Pradesh |
(whichever is higher) |
(whichever is higher) |
West Bengal |
(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) |
(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.
Q5. Which state imposes the highest tax on petrol in India?
The highest petrol tax in India is levied in Andhra Pradesh, where it is 31% VAT plus Rs. 4/litre VAT plus Rs. 1 litre Road Development Cess and VAT.
Q6. Is there GST on petrol and diesel?
The Goods and Services Tax (GST) does not apply to petrol or diesel. They apply to Value Added Tax (VAT), Central Excise Duty, and Central Sales Tax.
Q7. What is the dealer commission for petrol and diesel?
The commission rate for dealers selling petrol and diesel is 3.9% for petrol and 2.9% for diesel.
Q8. Does petrol and diesel come under the purview of GST?
The GST is not applicable to petrol and diesel.
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