All About Petrol Tax in Madhya Pradesh

The information in this article was last updated on 21st October 2022.

The Central Government reduced excise duty on petrol by ₹ 5 per litre to relieve Indian citizens of inflation, assist farmers in cultivating rabi crops and boost the consumption ratio in the economy. Following a similar line, the Government of Madhya Pradesh also reduced the petrol tax in Madhya Pradesh.

Want to know how much petrol tax has been reduced by the State Government and additional aspects? If yes, keep reading!

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What Is the Petrol Tax Levied in Madhya Pradesh?

VAT on petrol in Madhya Pradesh was ₹ 31.55 per litre, the highest in India.

However, after the Central Government announced a reduction in excise duty on petrol, the State Government reduced VAT by 4% and additional cess by ₹ 2 per litre of petrol. This reduction in VAT and excise duty will lower the petrol price by ₹ 7 per litre in Madhya Pradesh.

Take a look at this table below that lists essential components that make up the petrol price in Madhya Pradesh:

Elements	Effective as of 21st October 2022 (₹ per litre)
Price charged to dealers	₹ 57.35 per litre
Excise duty (Levied by the Central Government)	₹19.90 per litre
Average dealer commission	₹ 7.78 per litre
VAT (Levied by the State Government)	₹ 24.67 per litre {(29%(fuel price charged to dealers + excise duty + avg. dealer commission)+₹2.50}
Retail selling price at Punjab	₹ 109.70 per litre

(Note: This 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 VAT on Petrol in Madhya Pradesh?

The State Government imposes VAT (approximately ₹ 24.67 per litre) or sales tax on petrol in Madhya Pradesh. Additionally, the Union Government levies excise duty (₹ 19.90 per litre) on petrol, which sums up the petrol price in Madhya Pradesh, along with additional factors such as dealer's commission, price of crude oil, etc.

What Are the Factors Affecting Petrol Tax in Madhya Pradesh?

Here are the following factors that influence the tax on petrol in Madhya Pradesh:

1. Price of Crude Oil

Demand and supply, international political relations, oil reserves and supplies in the future influence the price of crude oil. Change in its price directly affects the petrol price.

2. Excise Duty

The Central Government's excise duty constitutes the petrol price in India. It is not a percentage but an amount of money set by the Union Government. Hence, it remains fixed and does not vary with changing fuel prices.

3. Sales Tax or VAT

Unlike excise duty on petrol, VAT on petrol varies with each state. Every state government imposes a sales tax or VAT after considering dealers' commission, excise duty, etc.

4. Demand and Supply of Fuel

Oil refinery companies often fail to meet increasing demands for petrol in India due to a lack of supply of crude oil. As petrol is processed from crude oil, lack of its supply hampers supply of petrol as well. Consequently, higher demand and lower supply of petrol increase the petrol price.

5. Valuation of Indian Rupees Against American Dollars

Crude oil is purchased from the international market in US dollars. Hence, any change in the valuation of American dollars against Indian rupees will directly impact the purchasing cost of crude oil and, consequently, the price of petrol.

6. Availability of Refineries

A fewer number of refineries will reduce the supply of petrol and fail to meet the market demand. This will increase the petrol price and vice versa.

Is Petrol Tax Same in All Places of Madhya Pradesh?

Yes. As stated earlier, the State Government levies a uniform VAT rate on petrol across the state. However, petrol prices may change across cities given charges paid as a dealer's commission.

Thus, this is all about the petrol tax in Madhya Pradesh. Make sure to note the latest updates on petrol tax and prices as they are subject to change periodically.

Frequently Asked Questions

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How much revenue loss has been estimated by officials of Madhya Pradesh after reducing VAT on petrol?

The State Government will suffer a revenue loss of approximately ₹ 1,948 crores in the months remaining in the financial year 2021-22 after reducing VAT on petrol.

Does dealers’ commission affect the petrol tax?

Oil Marketing Companies provide a commission to petrol pump owners, influencing the petrol tax in India.