Highly taxed diesel, petrol at all-time highs in India

by Ajit Dalvi 17 May 2021


It’s the start of a new week and mercifully there is no hike in the price of petrol or diesel. May 16 was the last price increase – making petrol costlier by 24 paise a litre (Rs 98.88) and diesel by 27 paise (Rs 90.40) – in Mumbai.

In Delhi, tanking up on petrol costs Rs 92.58 a litre ad fuelling diesel means you fork out 88.02 a litre. One of the key reasons for the sustained rise in fuel prices is the high level of taxation. Look at the data sheet below which reveals the extent to which the two fuels are taxed, with Delhi as the benchmark.

Of the Rs 92.58 price of a petrol litre, Rs 32.90 or 35.53% is charged as the Central government’s ‘Excise Duty’ and Rs 21.36 or 23% is what the state levies. Put together, taxes account for Rs 54.26 or 58.60% of the price of petrol in the capital city.

It’s similar with diesel, which costs Rs 83.22 a litre in Delhi today. While Central taxes comprise Rs 31.80 or 38.21% of the price, state VAT accounts for Rs 12.19 or 14.64% of the retail price. Cumulatively, taxes comprise Rs 43.99 or 52.85% of the final selling price to the consumer.