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Excise Duty on Petrol and Diesel

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Excise duty is nothing but the tax applicable on petrol and diesel. Retailers act as intermediaries and collect the excise duty on petrol and diesel from customers and pay it to the Government of India. Scroll through this article to understand more about excise duty on petrol meaning, tax rates on fuel, and more.  

What is Excise Duty on Petrol and Diesel in India?

In 2021, the excise duty on petrol and diesel was Rs 27.90 and Rs 21.80 per liter. In May 2022, the central government announced a reduction in fuel tax. Following that, the excise duty on petrol and diesel came down to Rs 19.90 and Rs 15.80 per liter. The central excise duty structure covers 20% of the petrol price and 17.6% of the diesel price in India. 

Breakdown of Excise Duty on Petrol in India

Component

Amount Per Liter

Basic excise duty

Rs 1.80

Agricultural and infrastructural development cess

Rs 2.50

Road and infrastructural development

Rs 8.00

Additional excise duty

Rs 7.60

Total excise duty on petrol

Rs 19.90

 

Breakdown of Excise Duty on Diesel in India

Component

Amount Per Liter

Basic excise duty

Rs 1.80

Agricultural and infrastructural development cess

Rs 4.00

Road and infrastructural development

Rs 8.00

Additional excise duty

Rs 2.00

Total excise duty on diesel

Rs 15.80

 

State Wise Tax On Petrol And Diesel In India

In India, the price you pay at the pump isn’t just the cost of fuel, it also includes taxes from both the Central and State governments. While the Central Government levies a uniform excise duty on petrol and diesel, it’s the state‑level taxes such as Value Added Tax (VAT) and sales tax that differ widely from one state or union territory to another. This is why fuel prices vary significantly across the country.

Here’s a snapshot of how VAT or sales tax varies on petrol and diesel across different states:

State Petrol Sales Tax/VAT Diesel Sales Tax/VAT
Andaman & Nicobar Islands 1% 1%
Andhra Pradesh 31% VAT + ₹.4/litre VAT+₹.1/litre Road Development Cess and Vat thereon 22.25% VAT + ₹.4/litre VAT+V.1/litre Road Development Cess and Vat thereon
Arunachal Pradesh 14.50% 7.00%
Assam 24.77% or ₹.18.80 per litre whichever is higher 22.19% OR ₹. 14.60 per litre whichever is higher
Bihar 23.58% or ₹ 16.65/Litre whichever is higher (30% Surcharge on VAT as irrecoverable tax) 16.37% or ₹ 12.33/Litre whichever is higher (30% Surcharge on VAT as irrecoverable tax)
Chandigarh ₹.10/KL cess +15.24% or ₹.12.42/Litre whichever is higher ₹.10/KL cess + 6.66% or ₹.5.07/Litre whichever is higher
Chhattisgarh 24% VAT + ₹.1/litre VAT 23% VAT + ₹.1/litre VAT
Dadra and Nagar Haveli and Daman and Diu 12.75% VAT 13.50% VAT
Delhi 19.40% VAT ₹.250/KL air ambience charges + 16.75% VAT
Goa 21.5% VAT + 0.5% Green cess 17.5% VAT + 0.5% Green cess
Gujarat 13.7% VAT+ 4% Cess on Town Rate & VAT 14.9% VAT + 4% Cess on Town Rate & VAT
Haryana 18.20% or ₹.14.50/litre whichever is higher as VAT+5% additional tax on VAT 16.00% VAT or ₹.11.86/litre whichever is higher as VAT+5% additional tax on VAT
Himachal Pradesh 17.5% or ₹ 13.50/Litre- whichever is higher 13.90% or ₹ 10.40/Litre- whichever is higher
Jammu & Kashmir 24% MST+ ₹.2/Litre employment cess, Rebate of ₹.3.50/Litre 16% MST+ ₹.1.00/Litre employment cess , Rebate of ₹.4.50/Litre
Jharkhand 22% on the sale price or ₹ 17.00 per litre , which ever is higher + Cess of ₹ 1.00 per Ltr 22% on the sale price or ₹ 12.50 per litre , which ever is higher + Cess of ₹ 1.00 per Ltr
Karnataka 29.84% sales tax 21.17% sales tax
Kerala 30.08% sales tax+ ₹.1/litre additional sales tax + 1% cess , Social security cess ₹.2 per litre 22.76% sales tax+ ₹.1/litre additional sales tax + 1% cess , Social security cess ₹.2 per litre
Ladakh 15% MST+ ₹5/Litre employment cess, Reduction of Rs.2.5/Litre 6% MST+ ₹1/Litre employment cess , Reduction of Rs.0.50/Litre
Lakshadweep 10% VAT 10% VAT
Madhya Pradesh 29% VAT + ₹2.5/litre VAT+1%Cess 19% VAT+ ₹.1.5/litre VAT+1% Cess
Maharashtra – Mumbai, Thane & Navi Mumbai 25% VAT+ ₹5.12/Litre additional tax 21% VAT
Maharashtra (Rest of State) 25% VAT+ ₹.5.12/Litre additional tax  21% VAT
Manipur 25% VAT 13.5% VAT
Meghalaya 13.5% or ₹ 13.50/Litre- whichever is higher (₹.0.10/Litre pollution surcharge)  5% or ₹ 9.50/Litre- whichever is higher (₹.0.10/Litre pollution surcharge)
Mizoram 18%, Social Infrastructure and Services Cess ₹ 2000/KL, Road Maintenance Cess ₹ 2000/KL 10%, Social Infrastructure and Services Cess ₹ 2000/KL, Road Maintenance Cess ₹ 2000/KL
Nagaland 21.75% VAT or ₹. 16.94/litre whichever is higher 17.20% VAT or ₹. 12.83/litre whichever is higher 
Odisha 28% VAT 24% VAT
Puducherry 16.98% VAT 11.22% VAT
Punjab ₹.2050/KL (cess)+ ₹.0.10 per Litre (Urban Transport Fund) + 0.25 per Litre (Special Infrastructure Development Fee)+16.58% VAT plus 10% additional tax  or ₹.14.93/Litre whichever is higher ₹.1050/KL (cess) + ₹.0.10 per Litre (Urban Transport Fund) +0.25 per Litre (Special Infrastructure Development Fee) + 13.1% VAT plus 10% additional tax  and  or ₹.10.94/Litre whichever is higher
Rajasthan 29.04% VAT+₹ 1500/KL road development cess 17.30% VAT+ ₹.1750/KL road development cess
Sikkim 20% VAT+ ₹.4000/KL cess  10% VAT + ₹.3500/KL cess 
Tamil Nadu 13% + ₹.11.52 per litre 11%  + ₹.9.62 per litre
Telangana     35.20% VAT 27% VAT
Tripura 17.50% VAT+ 3% Tripura Road Development Cess 10.00% VAT+ 3% Tripura Road Development Cess
Uttar Pradesh 19.36% or ₹ 14.85/Litre whichever is higher 17.08% or ₹ 10.41/Litre whichever is higher
Uttarakhand 16.97% or ₹ 13.14 Per Ltr whichever is greater 17.15% or ₹ 10.41 Per Ltr whichever is greater
West Bengal 25% or ₹.13.12/litre whichever is higher as sales tax+ ₹.1000/KL cess(20% Additional tax on VAT as irrecoverable tax) 17% or ₹.7.70/litre whichever is higher as sales tax + ₹ 1000/KL cess (20% Additional tax on VAT as irrecoverable tax)

Why Does the Government Levy Central Excise Duty on Petrol and Diesel?

The primary goal of excise duty on petrol and diesel is for the government to collect lump sum revenue. The amount collected from excise duty rates in India is quite substantial. The funds from energy taxation in India can be used for various developmental purposes. 
The latest reduction in fuel tax will create excise duty implications of up to Rs 1 trillion. This effort is targeted toward improving the rising inflation in the nation. 
 

Important Factors Determining the Excise Duty in India

Have you ever wondered what factors determine the applicable petrol and diesel tax in India? Check out the key factors influencing excise duty on petrol and diesel:

●    Supply and Demand

If the demand for fuels is low, the Central government will attempt to increase its tax collection to fulfill regular financial obligations. A high excise duty protects the government from such a scenario.

●    Price of Crude Oil

You will notice a fuel duty hike when the cost of crude oil in the international market is low. But an increase in the cost of crude oil leads to lower excise duty.

●    Financial Emergency

Petrol and diesel taxation are not included under GST. Therefore, the Indian government can increase fuel taxes during any financial emergency, like a healthcare crisis or global recession. 
For instance, the government of India is supplying food grains to poor individuals and improving healthcare facilities. It is creating a financial burden, leading to higher fuel taxes.  

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Frequently Asked Questions

The central petroleum excise duty is Rs 19.90. But the state petrol and diesel taxation will vary across different states. 

The central excise duty on petrol and diesel is similar all over India.

Excise duty is calculated according to the manufacturing cost plus profit, where goods are sold at a price lower than the production cost. 

The price of petrol and diesel in India depends on international supply and demand, foreign relations, and future reserves. 

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