All About Petrol Tax in Uttar Pradesh

The Government of Uttar Pradesh reduced the VAT on petrol by ₹ 7 per litre in petrol, acting on the request made by the Central Government to reduce the same. If you want to know more about petrol tax in Uttar Pradesh, keep reading!

What Is the Petrol Tax Levied in Uttar Pradesh?

Earlier, the State Government of Uttar Pradesh levied a sales tax of ₹ 18.74 or 26.80% per litre of petrol, whichever is higher.

However, the Government followed a similar path like the Union Government and reduced VAT on petrol by ₹ 7. Thus, reduced excise duty and VAT on petrol lowered its price by ₹12 per litre in Uttar Pradesh.

Here is the table mentioned below that illustrates a split-up of the petrol price:

Elements	Effective as of 22nd February (in ₹ per litre)
Price charged to dealers	₹ 48.23 per litre
Excise duty (levied by Central Government)	₹ 27.90 per litre
Average dealer commission	₹ 3.86 per litre
VAT (levied by the State Government)	₹ 14.4 per litre {18% of (fuel price charged to dealers + excise duty + avg. dealer commission)}
Retail price of petrol in Uttar Pradesh	₹ 94.38 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 that was last updated on 22nd February 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 Uttar Pradesh?

As mentioned earlier, the State Government imposes VAT (approximately ₹ 15.84 per litre) on petrol. The Central Government levies excise duty (around ₹ 27.90 per litre), which altogether comprises the petrol price in Uttar Pradesh. Additional factors such as dealer’s commission, crude oil price etc., also play essential determinants for petrol prices, apart from VAT and excise duty.

What Are the Factors Affecting Petrol Tax in Uttar Pradesh?

Here are the following factors mentioned below that affects petrol tax in Uttar Pradesh:

1. Crude Oil’s Price

A variation in crude oil’s price affects the petrol price. Factors such as oil reserves and supplies in the future, crude oil’s demand and supply and international political relations influence crude oil’s price.

2. Dealer’s Commission

Dealer’s commission affects petrol prices. This commission covers petrol pump owners’ income, expenses and profit.

3. Sales Tax and Excise Duty

Respective Governments of Indian states levy VAT or sales tax on petrol after considering factors such as dealer’s commission and Centre’s excise duty. Moreover, note that VAT on petrol varies with each state.

Unlike VAT, excise duty on petrol is an amount of money pre-defined by the Union Government. Hence, it remains fixed irrespective of any alterations in fuel prices.

4. Availability of Refineries

Refineries process crude oil to petrol. Hence, fewer refineries in the country will contribute to a lower supply of petrol. Consequently, lack of supply and increasing demand will result in higher petrol prices.

5. Valuation of Indian Currency Against American Dollar

The transaction for purchasing crude oil from the international market is completed in US dollars. So, any changes in the valuation of American dollars against Indian rupees will indirectly affect petrol prices.

6. Cost for Dealers

OMCs obtain and distribute crude oil and levies a price to dealers accordingly. This price influences petrol prices in Uttar Pradesh and across the country.

Is Petrol Tax Same in All Places of Uttar Pradesh?

Yes, the State Government imposes a similar rate of VAT on petrol in UP. However, petrol prices may vary across the cities of UP.

Despite VAT being a significant source of income for the state, it reduced the petrol tax in Uttar Pradesh to relieve Indian motorists of surging fuel prices. However, individuals must note that petrol tax and prices change. Hence, it is ideal to keep an eye on updates periodically to avoid hassles later.