All About Petrol Tax in Maharashtra

The information in this article was last updated on 27th January 2022.

The recent economic slowdown has led to a crunch in the Indian Government's cash reserves. However, this rise in fuel prices has helped the government narrow down the financial gap. Currently, petrol prices in Mumbai have crossed the ₹100 mark.

But you may be wondering why petrol has become so expensive and what all components are included in this price. Petrol tax in Maharashtra is one such component.

Here, we will share all details about this tax on petrol in Maharashtra.

What Is the Petrol Tax Levied in Maharashtra?

Total tax on petrol in Maharashtra includes sales tax or VAT (Value Added Tax) and centre's excise duty. Although the Central Government recently slashed excise duty, Maharashtra hasn’t made any changes to the state-imposed VAT, which is presently charged at ₹19.86 along with a cess of ₹10.12.

Take a look at the various components included while computing this price of petrol in Maharashtra.

Here is a table enlisting the different tax components making up the final petrol price in Maharashtra.

Elements	Effective as of 27th Jan (in ₹ per litre)
Price charged to dealers	₹48.23 per litre
Excise duty (Levied by the Central Government)	₹27.90 per litre
Average dealer commission	₹3.86 per litre
VAT (Levied by the State Government)	₹19.86 per litre {% of (fuel price charged to dealers + excise duty + avg. dealer commission)}
Cess	₹10.12 per litre
Retail selling price at Maharashtra	₹109.97 per litre

(Note: The above table serves as an example to explain the petrol tax breakup, with data taken from reliable and authorised sources, as of 27th Jan 2022. The actual prices, however, may vary as fuel price, dealer’s commission, cess and other such aspects change periodically. Check the latest petrol prices in Maharashtra)

Who Levies Petrol Tax in Maharashtra?

Petrol price in India is witnessing an upward swing, and there seems to be no end to this, thus adding up to troubles faced by vehicle owners and daily commuters. Now, this petrol price includes two types of taxes - VAT and Excise Duty. This makes petrol in India costlier. Now, you must be wondering who charges what?

The centre levies a central excise duty (₹27.90), while state governments impose VAT (approximately ₹19.86). Centre's excise duty is constant across all states. In contrast, VAT varies.

Maharashtra has been severely hit by the global health crisis, with its fiscal deficit jumping to 3.3% of the gross state domestic product.

Recently, the central government has reduced excise duty by ₹5 on petrol. This has triggered many other states to reduce VAT on petrol prices.

However, the tax on petrol in Maharashtra, i.e., VAT did not get reduced yet. Also, Maharashtra's revenue minister Mr. Balasaheb Thorat claimed that the centre has not yet paid ₹50,000 crore as GST dues to the state.

Factors Affecting Petrol Tax in Maharashtra

Following are the factors on which the price of petrol in Maharashtra depends.

1. Crude Oil Price

If there is a change in crude oil price globally, it also impacts petrol and diesel prices in India. A global change in crude oil's price affects petrol and diesel price cost in India. Mentioned below are factors that affect crude oil prices -

International politics
Its supply and demand
Future oil reserves and supply

2. Dealer's Cost

Various oil marketing companies do the work of distributing crude oil. Hence, these companies charge a specific price to dealers. This price is based on multiple factors like - refining cost, freight charges, and others. At present, the total refining margin stands at $2.5 for each barrel.

3. Commission Charged by the Dealer

These oil marketing organisations pay a specific commission to the petrol pump owners. These commissions cover their profits, income, and various other costs. Thus, a dealer's commission affects the petrol price in Maharashtra.

4. Centre's Excise Duty

The centre charges a duty on petrol and diesel, known as the excise duty. Now, this charge is a predefined amount and remains fixed. Thus, it does not fluctuate with the rise and fall in crude oil prices.

5. State's Sales Tax

The Maharashtra Government's tax on petrol is the VAT which it incurs on petrol and diesel. The VAT is charged on the base price + excise duty. The state of Maharashtra considers the dealer's commission, crude oil prices, dealer's commission, and more to ascertain the petrol tax in Maharashtra.

6. Fuel's Demand and Supply

With an increase in the rate of buying automobiles, there is an increased demand for petrol and diesel as well. Often due to the growing demand for petrol, the supply of crude oil cannot match up to it. This causes an imbalance in the demand and supply of petrol. Hence, an increase in demand with a corresponding lower supply leads to an increase in the fuel price.

In addition, crude oil needs processing. Hence, it is sent to the refineries for its processing. However, a lesser number of refineries will cause the supply of fuel to fall. Thus, it will further lead to an increase in the price of fuel.

7. Value of Indian Rupee Against US Dollar

Most international transactions are done in American Dollars (USD). All transactions related to crude oil are done in USD. Thus, any change in the value of the dollar will also impact the value of Indian rupees (INR). For instance, if the dollar's value is high, the cost to purchase crude oil will also shoot upwards. Hence, it will lead to a rise in the product's final price.

Is the Petrol Tax Same Across All Cities in Maharashtra?

Yes, the Maharashtra Government charges a uniform VAT across all the cities in the state. Hence, the residents will have to pay the same petrol tax in Maharashtra. However, the final price of petrol can vary from place to place due to variations in dealer’s commissions.

Also, the recent surging petrol price has prompted the centre and many states to reduce excise duty and VAT respectively. So, keep a close eye on petrol prices in Maharashtra to know the latest updates.