Taxes on Petrol and Diesel in India

The Central and state governments levy taxes on fuel. These taxes constitute 55% of the total retailing price of petrol. In the case of diesel, it is 50%.

However, taxes on diesel and petrol vary with each state. It is because states levy different sales taxes or VAT amounts.

If you want to know essential details about tax on petrol and diesel in India state wise, continue reading.

What Is the State Wise Tax on Petrol & Diesel in India?

With the rising fuel prices and increased VAT, few states registered growth in VAT collection. As of July 2021, states like Rajasthan and Madhya Pradesh fall under this category. Andaman and Nicobar Island was the lowest.

The primary difference was in the amount of VAT levied by each government. For example, Madhya Pradesh charges ₹31.55 per litre VAT on petrol, and Rajasthan levies ₹21.82 per litre VAT on diesel. While in Andaman and Nicobar Island, people pay only ₹4.82 per litre on petrol and ₹4.74 per litre on diesel.

Take a look at the table below showcasing the different tax rates on petrol and diesel in major Indian states and union territories -

States	VAT on Diesel	VAT on Diesel
Madhya Pradesh	₹3/L VAT + 23% VAT+ +1% cess	₹4.5/L VAT+ ₹33% VAT +1%cess
Rajasthan	₹1750/KL road development cess + 26% VAT	₹1500/KL road development cess + 36% VAT
Manipur	22.50%	36.50%
Telangana	27%	35.20%
Assam	23.66% or ₹17.45/L. VAT minus rebate of ₹5/L is applicable	32.66% or ₹22.63/L. VAT minus rebate of ₹5/L is applicable.
Delhi	16.75% VAT + ₹250/KL air ambience charges	30%
Uttar Pradesh	17.48% or ₹10.41/L	26.80% or ₹18.74/L
Andhra Pradesh	₹4/L VAT + ₹1/L road development cess and VAT + 22.25% VAT	₹4/L VAT + ₹1/L road development cess and VAT+ 31% VAT
Bihar	19% or ₹12.33/L (30% surcharge on VAT as irrecoverable tax)	26% or ₹16.65/L(30% surcharge on VAT as irrecoverable tax)
Maharashtra (Thane, Navi Mumbai, Mumbai)	₹3.00/L additional tax + 24% VAT	₹10.12/L additional tax + 26% VAT
Rest of the Maharashtra	₹3.00/L additional tax + 21% VAT	₹10.12/L additional tax + 25% VAT
Andaman and Nicobar Island	₹4.74/L	₹4.82/L

Note: The example of state government tax on petrol in India mentioned below explains the fuel tax structure of Delhi as of May 2021.

Breakdown of Tax Structure on Petrol & Diesel in Delhi

Petrol

Base price	₹34.19/L
Freight charges	₹0.36/L
Dealer’s charges (excluding the charges of VAT and excise duty)	₹34.55/L
Commission of dealers	₹3.77/L
Excise duty	₹32.90/L
VAT (inclusive of dealer’s commission)	₹21.36/L

State levies ₹21.36/L out of the total price of ₹92.58/L on petrol. On the other hand, the Central Government charges ₹32.90/L. The total combined taxes on petrol stands at ₹52.26.

Diesel

Base price	₹36.2/L
Freight charges	₹0.33/L
Dealer’s charges (excluding the charges of VAT and excise duty)	₹36.65/L
Commission of dealers	₹2.58
Excise duty	₹31.80
VAT (inclusive of dealer’s commission)	₹12.19

The central excise tax constitutes ₹31.80, and VAT is ₹12.19 on the base price of diesel. This comprises the retail cost of ₹83.22.

The tax rates on petrol and diesel keep changing. One such factor for higher VAT and excise duty is to meet higher expenses due to the current global health crisis. Therefore, keep yourself updated with the tax on petrol and diesel in India state wise. This will help you to avoid any confusion later.

Frequently Asked Questions

✓ What is the VAT on petrol and diesel in the state of Tripura?

As of July 2021, the VAT on petrol is ₹21.34 and ₹15.11 on diesel in Tripura.

✓ Does the price of crude oil affect the fuel taxes in India?

Yes. A surge in the crude oil price is one of the determinants of the rising domestic fuel prices. This, in turn, constitutes a rise in fuel taxes since these taxes make for 2/3rds of fuel price.