Explained: With hike in petrol and diesel prices, here's how much tax you pay on fuel
New Delhi, Dec 11: Over the past few days, petrol and diesel prices have sharply increased in the country. However, one can only blame the rise on the arrival of COVID-19 vaccine that rekindled the hope of the return of economic and social normalcy around the globe.
It can be seen that the prices of crude oil have shot up by around $10 per barrel, currently around $49/50 per barrel, as the world has started buying the fuel with more vigour.
The oil companies synced the hike in petrol and diesel prices with the increase in crude oil prices. Though, the oil companies have kept the petrol and diesel prices steady since December 10 after hiking for seven consecutive days.
Petrol price and its tax:
In Delhi, petrol is sold at Rs 83.71 per litre. This is closer to the all-time high of Rs 84 per litre, and highest since October 2018. However, the crude oil prices are much lower than their level of $80 per barrel in October 2018 when petrol sold Rs 84 a litre in Delhi.
Not just Delhi, petrol prices are higher in many other cities such as Mumbai where a litre of petrol costs over Rs 90, Rs 73.87 for diesel.
Petrol and diesel have become costlier by Rs 2.65 and Rs 3.40 per litre in Delhi in the past three weeks.
According to data available on the website of the Petroleum Planning and Analysis Cell (PPAC), of Rs 83.71 for one litre of petrol in Delhi, the oil itself is priced at Rs 26.34 per litre. The rest is taxes, duty and dealer's commission.
The Centre charges Rs 32.98 (125 per cent of the base price) as excise and the Delhi government levies Rs 19 (72 per cent of the base price) per litre on petrol Value-added Tax (VAT).
Diesel price and its tax:
The base price for diesel in Delhi is Rs 27.08, that is costlier than petrol at base price. The dealer's commission is Rs 2.53 per litre. The total tax and duty component on diesel in Delhi is Rs 42.81 per litre.
Since almost 60-70 per cent of the end cost of petrol and diesel are taxes and other charges, only 30-40 per cent of the oil component in India is linked to the benchmark prices of crude oil in international markets.
It can be seen that the recent increase in petrol and diesel prices is also different from the October 2018 rally in the sense that back then the government had cut the excise duty by Rs 1.50 per litre on both fuels.
Will the government hike its prices further?
Presently, the government has more room to increase petrol and diesel prices by exercising the permission it had taken from Parliament in March this year. The government obtained the parliamentary approval to increase the special excise duty on petrol by Rs 18 and on diesel by Rs 12.
The problem for the ruling government in Delhi is oil prices have deep connection with retail inflation. The cost of diesel is estimated to make up around two-thirds of the transportation cost. Rising oil prices affects people on multiple fronts. However, petrol and diesel have been an important source of earning for the government during the pandemic, when other sources dried up.