After staying steady for 21 days in the wake of Karnataka Assembly
election on May 12,2018, the prices of petrol and diesel resumed its upward journey on
May 14,2018
Since then the petrol prices have gone up by Rs 2.24 (Rs 76.87-Rs 74.63) per litre in Delhi setting all-time record for the costliest fuel price. Diesel is also at an all-time high of Rs 68.08
The government has resisted pressures from various quarters to cut taxes on petrol and diesel to bring down oil prices.
The crude oil price for Indian basket for 2018 and 2019 is USD 69.3 per barrel. One barrel is equivalent to 159 litres. At today's exchange rate USD 1 is equal to Rs 68. Calculating at this exchange rate (though the oil purchased at petrol pumps today must have been purchased around 3-4 weeks ago when rupee was a little stronger making crude oil a bit cheaper), the cost of one barrel crude oil comes to 68 x 69.3 = Rs 4,712.4.
So, the cost of one litre of crude oil by Indian oil marketing companies is 4,712.4/169 = Rs 29.6377.
The current prices of petrol and diesel as on May 22,2018 in four metro cities are
Oil Pricing Mechanism
India is hugely dependent on the import of crude oil to meet its petrol and diesel demands. About 80 per cent domestic requirement is met through crude oil imports. India also imports some amount of refined petrol and diesel.
In case of the import of refined petrol and diesel, the entire gamut of taxes is computed under various customs duties to establish parity. For example, import of petrol attracts 2.5 per cent (or Rs 0.74 at present) basic customs duty plus 19.48 special customs duties. Taxes form the major component of petrol and diesel pricing in the country.
For crude oil imports, an elaborate taxation mechanism has been laid out.
Import of crude oil attracts zero customs nil plus NCCD (National Center for Cold Chain Development) tax at the rate of Rs 50/tonne crude oil. It is negligible for one litre of crude oil import and hardly makes any impact on a litre of petrol and diesel prices.
At OMC Refinery Unit
Pricing for petrol refined from crude oil at oil marketing companies (OMC) unit includes entry tax plus processing and other operations cost. This comes at Rs 2.62 per litre for petrol and Rs 5.91 for diesel.
Freight cost and OMC margin add another Rs 3.31 per litre for petrol and Rs 2.87 for diesel. So, the price of petrol when it leaves the refinery is Rs 36.93 per litre and that of diesel is Rs 39.78 per litre
.
Excise Duties On Petrol and Diesel
The cumulative excise duty is Rs 19.48 on every litre of petrol and Rs 15.33 for a litre of diesel. The basic excise duty of Rs 4.48 per litre is levied on petrol, which also attracts a special additional excise duty of Rs 7 per litre and additional excise duty, that is, road and infrastructure cess of Rs 8 per litre.
In the case of diesel, the basic excise duty is Rs 6.33 per litre. Besides, a special additional excise duty of Rs 1 per litre and an additional excise duty in the form of road and infrastructure cess of Rs 8 per litre are also levied on diesel
At Dealer's Outlet
Petrol pump dealers receive oil at the prices arrived after computing excise duties. Price of petrol at dealer's store is Rs 56.41 and that of diesel is Rs 55.11 per litre. Now, dealer's commission is added to the prices of petrol and diesel.
The dealer's commission varies from state to state. The formula is: Rs 2674.74/KL + 0.859 per cent of billable price. In Delhi, dealer's commission is Rs 3.62 per litre on petrol and Rs 2.52 per litre on diesel.
The price of petrol before state taxes are levied in Delhi is Rs 60.03 per litre. For diesel, the price at dealer's outlet is Rs 57.63 per litre.
VAT/State Taxes And Final Prices
Petrol and diesel attract value-added tax (VAT), which varies from state to state. In Delhi, the VAT is 27 per cent or Rs 16.21 per litre of petrol and 17.27 per cent or Rs 9.91 on every litre of diesel.
Final prices are, Rs 76.24 per litre for petrol and Rs 67.54 per litre for diesel. Indian Oil Corporation (IOC) website says that prices may vary from one outlet to another within the same city.
At the final prices in Delhi, the government (Centre plus state) earns Rs 76.24 - Rs 36.93 (this price includes entry tax, OMC margin), that is, Rs 39.31 as taxes. This is more than 100 per cent of the cost of a litre of petrol at the time it leaves refinery.
In the case of diesel, government's income on every litre of diesel purchased by people is 19.85 (Rs 57.63-Rs 39.78) or 49.71 per cent as taxes - excluding entry tax charged at refinery.
Interestingly, the price of petrol at dealers' store in 2013-14 was Rs 47.18 per litre - much more than the current rate at Rs 37.31. The government's effective tax rate on petrol in 2013 was at around 43 per cent against over 100 per cent today. Diesel was priced at Rs 52.68 per litre in FY 2014 against today's rate of Rs 39.78
Since then the petrol prices have gone up by Rs 2.24 (Rs 76.87-Rs 74.63) per litre in Delhi setting all-time record for the costliest fuel price. Diesel is also at an all-time high of Rs 68.08
The government has resisted pressures from various quarters to cut taxes on petrol and diesel to bring down oil prices.
The crude oil price for Indian basket for 2018 and 2019 is USD 69.3 per barrel. One barrel is equivalent to 159 litres. At today's exchange rate USD 1 is equal to Rs 68. Calculating at this exchange rate (though the oil purchased at petrol pumps today must have been purchased around 3-4 weeks ago when rupee was a little stronger making crude oil a bit cheaper), the cost of one barrel crude oil comes to 68 x 69.3 = Rs 4,712.4.
So, the cost of one litre of crude oil by Indian oil marketing companies is 4,712.4/169 = Rs 29.6377.
The current prices of petrol and diesel as on May 22,2018 in four metro cities are
Oil Pricing Mechanism
India is hugely dependent on the import of crude oil to meet its petrol and diesel demands. About 80 per cent domestic requirement is met through crude oil imports. India also imports some amount of refined petrol and diesel.
In case of the import of refined petrol and diesel, the entire gamut of taxes is computed under various customs duties to establish parity. For example, import of petrol attracts 2.5 per cent (or Rs 0.74 at present) basic customs duty plus 19.48 special customs duties. Taxes form the major component of petrol and diesel pricing in the country.
For crude oil imports, an elaborate taxation mechanism has been laid out.
Import of crude oil attracts zero customs nil plus NCCD (National Center for Cold Chain Development) tax at the rate of Rs 50/tonne crude oil. It is negligible for one litre of crude oil import and hardly makes any impact on a litre of petrol and diesel prices.
At OMC Refinery Unit
Pricing for petrol refined from crude oil at oil marketing companies (OMC) unit includes entry tax plus processing and other operations cost. This comes at Rs 2.62 per litre for petrol and Rs 5.91 for diesel.
Freight cost and OMC margin add another Rs 3.31 per litre for petrol and Rs 2.87 for diesel. So, the price of petrol when it leaves the refinery is Rs 36.93 per litre and that of diesel is Rs 39.78 per litre
.
Excise Duties On Petrol and Diesel
The cumulative excise duty is Rs 19.48 on every litre of petrol and Rs 15.33 for a litre of diesel. The basic excise duty of Rs 4.48 per litre is levied on petrol, which also attracts a special additional excise duty of Rs 7 per litre and additional excise duty, that is, road and infrastructure cess of Rs 8 per litre.
In the case of diesel, the basic excise duty is Rs 6.33 per litre. Besides, a special additional excise duty of Rs 1 per litre and an additional excise duty in the form of road and infrastructure cess of Rs 8 per litre are also levied on diesel
At Dealer's Outlet
Petrol pump dealers receive oil at the prices arrived after computing excise duties. Price of petrol at dealer's store is Rs 56.41 and that of diesel is Rs 55.11 per litre. Now, dealer's commission is added to the prices of petrol and diesel.
The dealer's commission varies from state to state. The formula is: Rs 2674.74/KL + 0.859 per cent of billable price. In Delhi, dealer's commission is Rs 3.62 per litre on petrol and Rs 2.52 per litre on diesel.
The price of petrol before state taxes are levied in Delhi is Rs 60.03 per litre. For diesel, the price at dealer's outlet is Rs 57.63 per litre.
VAT/State Taxes And Final Prices
Petrol and diesel attract value-added tax (VAT), which varies from state to state. In Delhi, the VAT is 27 per cent or Rs 16.21 per litre of petrol and 17.27 per cent or Rs 9.91 on every litre of diesel.
Final prices are, Rs 76.24 per litre for petrol and Rs 67.54 per litre for diesel. Indian Oil Corporation (IOC) website says that prices may vary from one outlet to another within the same city.
At the final prices in Delhi, the government (Centre plus state) earns Rs 76.24 - Rs 36.93 (this price includes entry tax, OMC margin), that is, Rs 39.31 as taxes. This is more than 100 per cent of the cost of a litre of petrol at the time it leaves refinery.
In the case of diesel, government's income on every litre of diesel purchased by people is 19.85 (Rs 57.63-Rs 39.78) or 49.71 per cent as taxes - excluding entry tax charged at refinery.
Interestingly, the price of petrol at dealers' store in 2013-14 was Rs 47.18 per litre - much more than the current rate at Rs 37.31. The government's effective tax rate on petrol in 2013 was at around 43 per cent against over 100 per cent today. Diesel was priced at Rs 52.68 per litre in FY 2014 against today's rate of Rs 39.78
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