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All About Petrol Tax in Himachal Pradesh

The Government of Himachal Pradesh reduced VAT on petrol after the Central Government announced a reduction in excise duty on petrol by ₹5 per litre. Want to know more about petrol tax in Himachal Pradesh? If yes, keep scrolling!

The State Government of Himachal Pradesh lowered VAT on petrol by ₹2 per litre. This decreased the VAT on petrol to 17.5%.

This further reduced the petrol price by ₹12 per litre.

Take a look at the table mentioned below that illustrates the price-breakup of petrol in Himachal Pradesh:

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	₹4.23 per litre
VAT (levied by the State Government)	₹14.26 per litre {17.5% of (fuel price charged to dealers + excise duty + avg. dealer commission)}
Retail selling price of petrol at Himachal Pradesh	₹95.74 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 Himachal Pradesh?

The Central Government levies an excise duty (₹19.90 per litre) on petrol, while the State Government charges (₹14.26 per litre) on petrol in Himachal Pradesh. These tax rates altogether determine the petrol price in Himachal Pradesh, along with other factors such as commissions charged to dealers, price of crude oil etc.

What Are the Factors Affecting Petrol Tax in Himachal Pradesh?

Factors that play an influential role in determining petrol tax in HP are as follows:

1. Price of Crude Oil

Alteration in crude oil's price occurs due to its demand and supply, international political relations and oil reserves and supplies and any change in its price affects the petrol price in Himachal Pradesh and India.

2. VAT and Excise Duty

Each state government in India charges VAT, and the Central Government levies excise duty on petrol. These tax rates influence the petrol price in Himachal Pradesh.

3. Cost for Dealers

Oil Marketing Companies provide a commission to petrol pump owners, and this price also determines the petrol price in Himachal Pradesh.

4. Cost for Dealers

Oil Marketing Companies levies a price to dealers to distribute crude oil after considering expenses of refining crude oil, freight charges etc. This price component affects the petrol price.

5. Demand and Supply of Petrol

Higher demand and lower supply can raise petrol prices in Himachal Pradesh and across the country. Besides, the availability of refineries also impacts the demand and supply of petrol which further affect its price.

6. Valuation of Indian Rupees Against US Dollars

The exchange rate between rupees and American dollars is crucial in determining petrol prices in India as the transaction for purchasing crude oil from the international market is completed in dollars.

Is Petrol Tax Same in All Places of Himachal Pradesh?

Yes, the Himachal Pradesh Government imposes a uniform VAT on petrol in Himachal Pradesh. However, the price of petrol may vary across cities given the differences in dealers' commissions.

The total tax incidence on petrol was slashed by 50% after reducing excise duty, while the percentage is comparatively higher for states that reduced VAT on petrol. Himachal Pradesh is one such state. However, the petrol tax in Himachal Pradesh may vary in the future, following a change in factors mentioned above, consequently impacting its price.

Frequently Asked Questions

All

Is petrol tax in HP under the purview of GST?

No, tax on petrol is charged by the Himachal Pradesh Government and does not fall under the ambit of GST.

How much tax did the Himachal Pradesh Government impose before reducing tax in November 2021?

The Himachal Pradesh Government levied a VAT of 25% or ₹15.50 per litre on petrol before reducing the tax on petrol in November 2021.