All About Petrol Tax in Uttarakhand
The Central Government requested state governments to “commensurately reduce” sales tax or VAT on petrol. The Uttarakhand Government welcomed this Centre’s move and responded by reducing the petrol tax in Uttarakhand.
What Is the Petrol Tax Levied in Uttarakhand?
Following the decision of the Central Government, which reduced excise duty on petrol by ₹ 5 per litre, the Uttarakhand Government lowered VAT on petrol by ₹ 2 per litre. Thus, reduced VAT and excise duty made the petrol price cheaper by ₹ 7 per litre.
Here is this table mentioned below that highlights different tax rates charged by the Centre and State Government of Uttarakhand and additional components that make up the retail selling price of petrol in the state:
| 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 | ₹ 1.51 per litre |
| VAT (levied by the State Government) | ₹ 16.82 per litre {21.35% of (fuel price charged to dealers + excise duty + avg. dealer commission)} |
| Retail selling price of petrol at Uttarakhand | ₹ 95.58 per litre |
(Note: The above table serves only as an example to explain the tax breakup for petrol in Uttarakhand, 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 Petrol Tax in Uttarakhand?
The Central Government imposed excise duty (₹ 19.90 per litre) on petrol. At the same time, the State Government levies VAT (₹ 16.82 per litre) on petrol. These tax rates constitute the petrol price in Uttarakhand, along with essential factors such as dealers’ commissions, price of crude oil etc.
What Are the Factors Affecting Petrol Tax in Uttarakhand?
1. Dealers’ commissions
Oil Marketing Companies provide a commission to petrol pump owners. This commission changes with location and agencies. This commission plays a deciding factor in petrol prices in India.
2. Price of Crude Oil
Any difference in the price of crude oil in the international market due to its demand and supply, global politics and oil reserve and its supply directly affect the cost of petrol in the domestic market.
3. Cost for Dealers
Oil Marketing Companies purchase and distribute crude oil and accordingly levy a price to dealers after considering refining cost, freight charges etc. This price charged to dealers is also an essential determinant of petrol price in Uttarakhand and India.
4. Excise duty
The Central Government charges an excise duty on petrol, and it remains fixed irrespective of varying petrol and crude oil prices. This tax rate significantly determines petrol prices in India.
5. VAT or Sales Tax
Each state government sets VAT on petrol, and hence it varies with respective states. According to the Planning and Analysis Cell (PPAC), each state government observes different methods of imposing a tax on petrol; for example, some states levy octroi or additional cess to collect tax on petrol. Nevertheless, whatever be the method of tax collection on petrol, VAT or sales tax determine the petrol price.
6. Valuation of Indian Rupees Against Dollars
The exchange rate between Indian rupees and dollars influences the petrol price in India. This is because crude oil is purchased from the international market, and the transaction is completed in dollars.
7. Demand and Supply
The demand for petrol is increasing steadily. However, fewer refineries, higher input price of crude, etc., lower the quantity of petrol available for sale. So, higher demand and lower supply will inevitably raise the petrol price and vice versa.
Is Petrol Tax Same in All Places of Uttarakhand?
Yes, the State Government imposes an equal VAT rate on petrol across the state. However, petrol prices may vary across cities given the differences in dealers’ commissions charged in each city.
With this, essential information about petrol tax in Uttarakhand comes to an end. However, remain informed about the petrol price in the state as it keeps changing over the period.
Frequently Asked Questions
How much VAT did the Uttarakhand Government impose on petrol before reducing it in November 2021?
The VAT on petrol in Uttarakhand was ₹ 19 per litre or 25% per litre, whichever is higher, before the State Government reduced it in November 2021.
Is there any additional cess on VAT on petrol in Uttarakhand?
No, there is no additional cess on petrol tax in Uttarakhand.