Petrol Tax in Punjab: Different Types of Taxes Applicable on Petrol

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

The recent economic downfall contributed to a cash crunch in the government's cash reserve. However, a rise in fuel prices has helped the government narrow down this financial gap. Currently, the price of petrol in Punjab stands at ₹96.64 per litre. There are several factors which lead to the increase or decrease in cost of petrol in Punjab. One such factor is tax on petrol in Punjab.

What Is the Petrol Tax Levied in Punjab?

Total tax on petrol in Punjab is the sum of the VAT or sales tax and excise duty. Post the Central Government’s call to slash excise duty on petrol, the Punjab State Government also reduced VAT from 27.27% to 15.15% (13.77%+10% surcharge).

The table below shows all the tax components and other parameters involved in the retailing price of petrol.

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
VAT (Levied by the State Government)	₹19.35 per litre{15.15% of (fuel price charged to dealers + excise duty + avg. dealer commission)}
Retail selling price at Punjab	₹96.60 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 21st October 2022 . The actual prices, however, may vary as fuel price, dealer’s commission, cess and other such aspects change periodically. Check the latest petrol price in Punjab).

Who Levies Petrol Tax in Punjab?

Central government levies excise duty on petrol. However, the State government imposes sales tax or VAT on petrol in Punjab.

Indian government recently increased the excise duty on petrol to cope with the enormous financial deficit of 9.3% in Gross Domestic Product in 2020-2021 and to meet other state expenses.

What Are the Factors Affecting Tax on Petrol in Punjab?

1. Crude Oil Price

Global changes in the price of crude oil impacts petrol and diesel prices in India. Consequently, the cost of these fuels changes in states as well. The price of crude oil depends on its supply and demand, International politics, and future oil reserves and supply.

2. Dealer’s Commission

The commission paid by the oil marketing organisations to petrol pump owners is the dealer's commission. This affects tax on petrol in Punjab.

3. Dealer’s Cost

Sometimes, oil marketing organisations do the work of distributing crude oil. To do this work, these companies charge a specific price to the dealers.

5. Demand and Supply of Fuel

If the rate of buying automobiles increases, the need for petrol and diesel increases. Due to this, the rate of petrol or diesel increases.

5. Availability of Refineries

The crude oil is sent to refineries for processing into petrol. However, if there are fewer refineries, the supply of petrol decreases. This leads to an increase in petrol prices.

6. Value of Indian Rupees Against US Dollar

The transaction of crude oil takes place in USD. Thus, any change in the value of a dollar will also affect the value of INR. This will lead to an increase in the product's final price.

Is the Petrol Tax Same in All Places in Punjab?

Tax on petrol in Punjab is the same for all cities. However, the final price of petrol might vary from place to place, due to additional charges of specific petrol pumps.

Frequently Asked Questions

✓ Does petrol tax in Punjab include GST?

Petrol does not fall under the GST regime. Hence, GST does not apply to petrol prices in India.

✓ How much revenue loss has been estimated after the reduction in VAT on fuel in Punjab?

As per the Finance Minister Manpreet Singh Badal there will be ₹6000 crores of annual loss in revenue after the reduction in VAT on fuel in Punjab.