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The Central Government offered tax relief on petrol by ₹5 per litre and requested other states do the same to relieve Indian citizens from rising petrol prices. The Administration of Jammu and Kashmir accepted this Centre’s decision and reduced the petrol tax in Jammu and Kashmir.
Lieutenant Governor of Jammu and Kashmir, Manoj Sinha, stated that the Prime Minister of India had gifted citizens a Diwali gift by reducing excise duty on petrol. Following the Central Government’s move, the Administration of Jammu and Kashmir slashed VAT on petrol by ₹7 per litre.
Take a look at this table mentioned below that illustrates tax rates charged and additional components that make up the petrol price in Jammu and Kashmir:
|
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 |
₹5.93 per litre |
|
VAT (levied by the State Government) |
₹17.36 per litre {20.87% of fuel price charged to dealers + excise duty + avg. dealer commission)} (an additional employment cess of ₹5 per litre and a reduction of 0.50 per litre is applicable) |
|
Retail selling price of petrol at Jammu and Kashmir |
₹100.54 per litre |
The Central Government imposes excise duty (₹19.90 per litre) on petrol, while the Administration of Jammu and Kashmir levies VAT (approximately ₹17.36 per litre). These tax rates influence the petrol price in Jammu and Kashmir, apart from additional factors like dealers’ commissions, the price charged to dealers etc.
Factors that affect the petrol tax in Jammu and Kashmir are stated below:
Crude oil is purchased from the international market, and any change in the price of crude oil globally directly affects the price of petrol in the domestic market.
Factors that change crude oi’s price are as follow:
Oil Marketing Companies purchase and distribute crude oil, and based on the freight charges, expenses incurred on refining crude oil, etc., they levy a charge to dealers. This price charged to dealers is essential in determining the petrol price in India.
The Central Government imposes excise duty on petrol. It is not a percentage but a fixed amount of money that remains constant irrespective of varying fuel and crude oil prices.
Respective state governments impose VAT or sales tax on petrol after assessing excise duty, dealers’ commissions, etc. This tax rate charged by the state on petrol determines the petrol price in Jammu and Kashmir.
Fewer refineries, higher input prices of crude oil, etc., often lead to a lower supply of petrol and fail to meet its increasing demand. This raises the petrol price in India.
Crude oil is purchased from the international market, and the transaction is completed in dollars. Therefore, the exchange rate between Indian rupees and American dollars impacts the petrol price in the domestic market.
Oil Marketing Companies pay a commission to petrol pump owners, which affects the petrol price in Jammu and Kashmir.
Yes, the Administration of the Union Territory imposes a uniform rate of VAT on petrol in Jammu and Kashmir. However, petrol prices may vary in respective places depending on the commission charged by dealers.
The additional relief on petrol tax in Jammu and Kashmir by the Administration reduced the petrol price by ₹12 per litre. However, petrol tax and its price are subject to change periodically; hence, keep an eye on the latest updates to avoid confusion later.
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Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.
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