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Half Of India’s Petrol Price Is Tax


Nagarabandh in Madhya Pradesh is now an unwelcome milestone on India’s fuel map. It’s at least one place where unleaded petrol now retails at more than Rs 100 a litre.

Auto fuel prices have surged to a record tracking the rise in global crude. Yet, the key factor for costlier petrol and diesel are taxes that account for about 55-60% of what consumers pay at the pump.

Brent crude oil has crossed $63 per barrel, gaining 24% so far in 2021 because of improved demand outlook and rollout of vaccines. Indian oil retailers increased retail prices in tandem since Jan. 6 after a month-long pause.

According to data compiled by BloombergQuint:

  • Since Jan. 6, the retail prices of petrol and diesel have gone up by Rs 5.58 and Rs 5.83 a litre, respectively.
  • In the last one year, the two fuels have turned costlier by Rs 17.35 and Rs 15 a litre, respectively.

That means, unleaded petrol (without additives) now retails at Rs 100.15 for every litre at Nagarabandh, a village in Anuppur district, prices listed on Indian Oil Corp.’s website show. According to executives of oil companies, that’s the costliest in India.

Diesel retails for Rs 91.86 a litre in Ganganagar. Executives quoted earlier, who didn’t want to be identified as they are not allowed to speak to the media, that’s the highest for the transportation fuel in India.

BloombergQuint couldn’t not independently check prices for all dealers across the country.

Costlier crude is only partly to blame as 35-42% of the retail price is linked to the oil benchmarks. The rest is largely central and state taxes.

Brent crude fell to a low of $19 a barrel in April last year, tumbling more than 70% from the start of 2020 as lockdowns disrupted the global economy. Indian consumers didn’t benefit as the government used the opportunity to increase taxes to shore up revenue. The Modi administration hiked excise duty in two tranches—by Rs 13 per litre on petrol and Rs 16 per litre on diesel. Some states, too, increased value-added tax.

The hike helped the central government’s excise revenue swell 54% over a year earlier to Rs 2.36 lakh crore during April-December 2020, according to data from Controller General of Accounts.

But the taxes didn’t come down when the crude started rising. Now they account for more than half of the price at the pump. And levies are much higher than the base price of fuel.

In the national capital Delhi—for which full price break-up is available—petrol and diesel stood at a record Rs 89.29 and Rs 79.7 per litre, respectively, on Feb. 16. According to the price break-up by Indian Oil:

  • In Delhi, nearly 60% of what a consumer pays at the filling station goes to the government in taxes.
  • On diesel, taxes account for 54.6%.

Prices in Delhi are still lower than in Nagarabandh and Ganganagar. Meaning, state levies in Madhya Pradesh and Rajasthan are relatively higher.

Courtesy –

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