All About Petrol Tax in Assam

The State Government of Assam welcomed the decision of the Central Government to reduce excise duty on petrol. Accordingly, it acted on the latter's request to lower the petrol tax in Assam, thus reducing residents' liability to pay higher petrol prices across Assam.

What Is the Petrol Tax Levied in Assam?

The Assam Government reduced VAT on petrol by ₹ 7 per litre, following the Central Government decision to reduce excise duty on petrol.

Here is this table mentioned below that highlights the main components which makes up the petrol price in Assam:

Elements	Effective as of 21st October 2022 (in ₹ per litre)
Price charged to dealers	₹ 57.35 per litre
Excise duty (levied by the Central Government)	₹ 19.90 per litre
Average dealer commission	₹ 5.47 per litre
VAT (levied by the State Government)	₹ 14.60 per litre {17.65 % of (fuel price charged to dealers + excise duty + avg. dealer commission)} (a rebate of ₹ 5 per litre from VAT is applicable)
Retail selling price of petrol at Assam	₹ 97.32 per litre

(Note: The above table serves only as an example to explain the petrol tax breakup, with data taken from reliable and authorised sources as of 21st October 2022 . The actual prices, however, may vary as fuel price, dealer's commission, cess and other such aspects change periodically.)

Who Levies Petrol Tax in Assam?

The Central Government levies an excise duty (₹ 19.90 per litre) on petrol, and the State Government charges VAT rate (approximately ₹ 14.60 per litre) on petrol, which altogether sums up the petrol price in Assam, along with additional factors such as dealer's commission, purchasing cost of crude oil, etc.

What Are the Factors Affecting Petrol Tax in Assam?

Several factors that affect petrol tax in Assam are as follows:

1. Cost for Dealers

Oil Marketing Companies levies a price to dealers for distributing crude oil. This price is charged after considering refining cost, freight costs etc. This price is a determining factor of petrol prices in Assam and across India.

2. Price of Crude Oil

Crude oil, which is processed into petrol, is purchased from the international market. Changes in its price due to its demand and supply, international political relations, oil reserves, and their supply directly influence the price of petrol.

3. Dealer's Commission

Dealers get a commission from Oil Marketing Companies, covering the former's income, profit and expenses. This commission plays an essential determinant of petrol prices.

4. Excise Duty and Sales Tax

The Central Government imposes excise duty on petrol, and it determines petrol prices across the country. For instance, when the Union Government increases tax on petrol, Indian oil corporations also increase the petrol price to retain marginal profits and retrieve losses.

Each State Government levies sales tax or VAT on petrol, and hence it varies across states of India. This component of VAT on petrol also determines the petrol price.

5. Valuation of Indian Currency Against US Dollars

Oil companies in India pay in dollars to purchase oil from the international market. Thus, the exchange rate between Indian rupees and US dollars influences Assam and India's petrol price.

Is Petrol Tax Same in All Places of Assam?

Yes, the Assam Government imposes an equal rate of VAT on petrol in Assam. However, petrol prices may vary across cities, given different dealers' commissions in respective cities.

The tax incidence on petrol had been lowered to 50% after reduction of excise duty. It is slightly higher in states that reduced VAT on petrol to relieve citizens from surging petrol prices. Assam is one of such states. However, residents of Assam must keep an eye on petrol tax in Assam and petrol's final price as they keep changing over the period.