The government is not in full consensus to immediately cut taxes on petrol and diesel with a proposal by the oil ministry to cut duty on the fuels has not found favour with the finance ministry, according to an ET report. Officials of the ministries recently discussed with oil marketing companies (OMCs) how to handle the spike in the international crude oil prices.
Finance ministry officials impressed upon companies to do more to deal with rising prices, the report said quoting sources.
The price of petrol remained unchanged for the eighth straight day on Thursday, while the diesel price also followed the cue. The price of petrol in Delhi currently stands high at Rs 105.41 per litre and at a record Rs 120.51 a litre in Mumbai. Diesel prices also maintained the status quo at Rs 96.67 a litre in Delhi and at Rs 104.77 per litre in Mumbai.
Various Taxes and Charges on Petrol
Let’s take an example of the petrol price as on April 1 in Delhi (break-up of which is latest available), when it was Rs 101.81 per litre, according to a notification from Indian Oil Corporation.
The base price of petrol on April 1 stood at Rs 53.34 per litre. Above that, a freight charge of 20 paise was levied on every litre. These two components make dealers’ charges (excluding excise duty and value-added tax) at Rs 53.54 per litre.
Apart from this, an excise duty of Rs 27.90 per litre is levied by the Centre. There is also a state value-added tax (VAT) of Rs 16.54, including VAT on dealers’ commissions. An average dealers’ commission of Rs 3.83 is also added to per-litre petrol. These all taxes and charges add up to Rs 101.81, the petrol price of April 1.
Recent Petrol Price Hike
The prices of petrol and diesel recently hiked by around Rs 10 after back-to-back increases for around 17 days. The petrol price hikes were put on hold in November and started rising since March 22 after the outcome of the state elections.
The retail prices of petrol and diesel in India are linked to the international prices of crude oil. And, the global oil prices have been at elevated levels since the time Russia invaded Ukraine due to which global oil supply halted.
After Russia approved a military operation in Ukraine on February 24, the Brent crude oil prices hit USD 100 per barrel for the first time since 2014. In the following days, the US’ WTI crude futures even skyrocketed to USD 130.50 a barrel, its highest since July 2008, before retreating. Brent also hit a high of USD 139.13, also its highest since July 2008. Currently, crude oil stands at USD 108.15 per barrel.
The variation in prices of petrol and diesel is on two counts — differences in freight charges and different VAT rates across states. Freight charges depend upon the distance between the refining plant and the petrol pump; the farther is the petrol pump from the oil refining unit, the more is the freight charge. Because of this, the prices may vary from region to region.
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