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Do you know that you’re paying more tax for petrol than its actual cost?

A recent report by PTI has demystified the constantly changing tax structure for the petrol and diesel fuels in India. In the last one year alone, the government of India has hiked the excise duties on fuels five times.

The most recent hike on excise duty came last week (INR 1.6 per litre on petrol and 40 paise on diesel). This hike means, the taxes you pay for a litre of petrol is higher than the actual cost of the fuel itself!

In Delhi, a litre of petrol costs INR 60.70 at the pump but actual cost of production of petrol based on the foreign exchange rates in the later part of October and average crude oil prices is just INR 24.75 litres. Taking into account the margins for the refineries and other costs (logistics), a litre of petrol is sold to the petrol pump dealer for INR 27.24 per litre.

The increase in exercise duty is aimed at compensating for the government’s fiscal deficit. [Image – FawnConsulting][/caption]With this base price, INR 19.06 central excise duty, a dealer margin of INR 2.26 and VAT or sales tax of INR 12.14 are added to arrive at INR 60.70 per litre. Similarly, a production cost of a litre of diesel is INR 24.86 for the refinery and it’s sold to the petrol pump at INR 27.05. Central excise duty, dealer commission and VAT or sales tax for diesel stand at INR 10.66, 1.43 and 6.79 respectively, taking the price to INR 45.93 in Delhi.

Also read – Private cars to get costlier in Delhi due to increase in one time parking charge

The recent hike in excise duty was absorbed by the oil companies and hence there is no change in the fuel prices. The government received a revenue of INR 99,184 crores in excise collections from the petroleum sector in 2014-15. In the first quarter of 2015-16 fiscal, the excise collections from the sector stood at 99,184 crores.

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Understanding Petrol Prices in India

Understanding Petrol Prices in India

Posted by RushLane on Thursday, February 4, 2016

Video via – InShorts

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