Today’s Petrol Price: Tax on gasoline reduced to 50%

The skyrocketing prices of Petrol have always been a concern for Indians for a long time. The same concern remains with today’s Petrol Price. These prices affect the entire market as well as inflation. Today’s Petrol Price still remains problematic. Petrol being part of the CPI basket means it directly influences inflation, whereas indirect impacts happen because it affects the prices of other non-petrol products that use energy products. However, it is worth noting that the trends in Petrol prices are dynamic and revised daily in India.

As the Central Government reduced the duties on Petrol, a number of states have decided to reduce the petrol prices. As a direct effect of reduction in VAT ( Value added tax), the Petrol prices were likely to be reduced by almost Rs. 12 per liter. In some parts of India, the state governments requested BJP to reduce the other taxes and excise duties.

In order to understand the dynamic rates of Petrol, we first need to understand the main factors that affect it.

Cost of Crude oil

As Crude oil is not a refined commodity of the international market, its price is subject to changes, as per the fluctuations in crude oil rates, petrol price hikes. It is worth mentioning that crude oil rates also vary according to their demands in the market. Considering the scenario of a growing number of automobiles, the government has to acquire more crude oil due to the gap between production and utilization.

Commissions

Commission accounts for one of the most significant factors for the hike in the petrol prices. As the OMC’s take full charge of acquiring and distributing the crude oil or other fossil fuels, the rates are highly dependent on the factors such as freight charges. In addition to the above, OMCs have to pay commission money to the fuel dealers, which adds more hidden costs. Henceforth, the cost of Petrol is affected.

Excise duty and VAT

The government of India charges a sum of Rs.32.98 per liter and Rs.31.83 per liter for petrol and diesel, respectively. Despite rising or falling in crude oil rates, the government levies a fixed sum of excise duty on the oil. The Government of India imposes taxes on both diesel and Petrol. Based on specific policies, the center might alter tax structures. Marginal returns from fossil fuels and losses from the recovery are the main reasons for the change in this structure. Taxes on fossil fuels affect the price of fuels as well. In addition to this, the state governments calculate the tax on the basis of excise duty, dealer’s commission which causes the rates to hike by a significant factor.

Following is the list of both Petrol and Diesel prices in India.

Mumbai