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.

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.

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.

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.