Petrol, diesel prices at record high: Two tables show how government taxes have made fuel costlier nationwide

Auto fuel prices have gone through the roof, on the back of higher international crude oil prices, over the last few days. The Narendra Modi-led government is taking a lot of flak from various quarters, because many feel that costlier petrol and diesel are due to elevated tax rates.  Over the past 12 days, petrol prices have increased by up to Rs 3.37 per litre, while diesel prices are up by Rs 3.02 in four metros.

There is now a growing public clamour for a reduction in taxes, but neither New Delhi nor the states have committed to such a step. Petrol and diesel do not come under the Goods and Services Tax (GST), and therefore fuel prices vary across states.


Petrol retailed at Rs 85.65 a litre in Mumbai on Friday. Fuel costs the most in the financial capital.

 Petrol, diesel prices at record high: Two tables show how government taxes have made fuel costlier nationwide

Representational image. Reuters.

The price of the fuel is already at an all-time high in Mumbai, along with Delhi and Chennai, and is now creating new benchmarks with each passing day.

In Delhi and Chennai, petrol is selling at for Rs 77.83 and Rs 80.80 per litre respectively, according to Indian Oil Corp (IOC) data.

On Friday, petrol was selling at Rs 80.47 per litre in Kolkata. The city of joy joined the club on Thursday, when petrol sold at Rs 80.12 a litre, the highest in nearly four years.

The persistent rise in transport fuel prices is largely attributed to the surge in crude oil prices and high excise duty. The price of Brent crude oil, the global benchmark, is currently at over $79 per barrel.


Diesel prices, which have already hit unprecedented levels, set new records across the country. In Delhi, Kolkata, Mumbai and Chennai, it is selling at Rs 68.75, Rs 71.30, Rs 73.20 and Rs 72.58 per litre respectively.

Diesel, to a large extent, drives the Indian economy and surging prices are now burning holes in pockets. It must be mentioned here that the government permitted daily price revisions of petrol and diesel in June 2017, to help state-run oil marketing companies (OMCs) cut losses.

These two charts clearly show that higher taxes, highlighted in this Firstpost article, have definitely helped the government mop up a lot of revenue.

Break-up of petrol and diesel prices in Delhi effective 25 May 2018
Elements Unit Petrol
Cost & freight price on moving average basis of crude oil $/barrel 87.34
Average exchange rate Rs/$ 67.59
Price charged to dealers (Excluding excise & VAT) Rs/Litre 38.17
Add: Excise duty Rs/Litre 19.48
Add: Dealer commission (average) Rs/Litre 3.63
Add: VAT* applicable for Delhi @27% Rs/Litre 16.55
Retail selling price at Delhi Rs/Litre 77.83
Elements Unit Diesel
Cost & freight price on moving average basis of crude oil $/barrel 91.95
Average exchange rate Rs/$ 67.59
Price charged to dealers (Excluding excise & VAT) Rs/Litre 40.78
Add: Excise duty Rs/Litre 15.33
Add: Dealer commission (average) Rs/Litre 2.53
Add: VAT* applicable for Delhi @17.27% Rs/Litre 10.11
Retail selling price at Delhi Rs/Litre 68.75
*including VAT on dealer commission

As per IOC data, petrol is priced at Rs 41.80 per litre in Delhi. On this, the government levies Rs 36.03 in taxes, pushing the fuel's retail price to Rs 77.83 per litre in the national capital, as on 25 May. Taxes on the product work out to 86 percent of the cost.

Similarly, diesel is priced at Rs 43.31, and the total tax incidence is Rs 25.44 per litre. Taxes on the product work out to 59 percent of the cost.

It has to be remembered that taxes have remained on higher side for the last four years i.e. throughout the Narendra Modi regime..

Contribution of the petroleum sector to the exchequer in Rs crore
Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
1. Contribution to central exchequer (Apr-Dec)
A. Tax/ duties on crude oil &  petroleum products
Cess on crude oil 16285 16183 15934 15470 13285 10161
Royalty on crude oil / gas 4366 4551 3858 4885 4649 3431
Customs duty 4540 5042 4767 7446 9521 8934
Excise duty 73310 77982 99184 178591 242691 160156
Service tax 1591 2092 2181 2837 2956 1227
IGST 9805
CGST 3967
Others 247 241 101 125 122 34
Sub total (A) 100339 106091 126025 209354 273225 197715
B. Dividend to government/ income tax etc.
Corporate/ income tax 21385 23326 23921 24824 31870 22438
Dividend income to central govt. 9266 9164 9197 10217 17501 4238
Dividend distribution tax 2269 2951 3500 4590 6197 2210
Profit petroleum on exploration of oil/ gas* 9367 11369 9423 9457 5742 4207
Sub total (B) 42287 46810 46041 49089 61309 33092
Total contribution to central exchequer (A+B) 142626 152901 172066 258443 334534 230807
2. Contribution to state exchequer
A. Tax/ duties on crude &  petroleum products
Royalty on crude oil / gas 13306 14493 14159 7932 11942 6719
Sales tax/ VAT on POL oroducts 115036 129045 137157 142848 166378 131732
Octroi, duties incl. electricity duty 3391 4156 3838 2712 3524 1427
Entry tax / others 4288 4748 5372 6622 7742 6855
Sub total (C) 136021 152442 160526 160114 189587 150916
B. Dividend to government/ direct tax etc.
Dividend income to state govt. 14 18 28 95 183 80
Sub total (D) 14 18 28 95 183 80
Total contribution to state exchequer (C+D) 136035 152460 160554 160209 189770 150996
Total contribution of petroleum sector to exchequer (1+2) 278661 305361 332620 418652 524304 381803
Notes: * Profit petroleum on exploration of Oil/ Gas as provided by MoP&NG; Source: PPAC

The four-year old NDA government has mopped up Rs 16.57 lakh crore as tax revenue from petroleum product sales, mainly from petrol and diesel.

In financial year 2016-17 and in fiscal 2015-16, growth in the government's revenue from petroleum products was 25 percent each. This is much higher than in 2014-15 and 2013-14, when growth stood at around 9-10 percent each. 2017-18's data is available up to December 2017 only and hence is not comparable with the preceding year.

In 2016-17, the government's revenue from the petroleum sector was Rs 5.24 lakh crore, accounting for 3.5 percent of GDP. In the preceding year, the ratio was 3.1 percent. By comparison, during 2012-15, the ratio was around 2.8 percent. Of the Rs 5.24 lakh crore, the central government's excise duty constitutes Rs 2.43 lakh crore or 46 percent. The state government's sales tax and VAT account for Rs 1.66 lakh crore or 32 percent.

Clearly, the NDA government has been milking the sector for higher tax revenues, and has denied consumers the benefit of lower international crude oil prices that prevailed around the time that the NDA assumed power.

(With inputs from IANS)

Updated Date: May 25, 2018 17:22:33 IST