38 per cent of new petrol price reflects central, state taxes

About 38 per cent or Rs26.22 in petrol price of Rs68.64 a litre in Delhi is because of central and state government taxes.

State-owned oil firms had last week hiked petrol price by Rs 1.80 a litre, the fifth increase this year as oil imports became costlier due to fall in rupee value.

The new rate is based on a basic price of petrol, without including any taxes, refining cost or margin, of Rs41.38 per litre, oil company officials said.

The retail selling price is calculated by adding customs duty, central excise rates and VAT to the basic price which is nothing by the average of international oil rate.

On Rs41.38 a litre base price, a customs duty of 2.5 per cent or Rs1.04 per litre is levied.

Beyond this, the central government levies Rs6.35 per litre basic cenvat duty, Rs6 per litre special additional excise duty and Rs2 per litre additional excise duty towards highway cess. The excise duty after including education cess at the rate of 3 per cent, totals up to Rs14.78 per litre.

The central taxes do not increase when the base rate is raised because these are fixed rates.

However, VAT, which in Delhi is at 20 per cent, rises with every increase. Earlier, VAT on petrol was Rs10.62 per litre, but after the hike, it totals to Rs11.44 a litre.

In the case of diesel, the total taxes account for only Rs7.66 of the retail price of Rs41.29 in Delhi. The taxes include Rs 0.76 in customs duty, Rs2.06 in excise duty and Rs4.84 state VAT.

There is no central excise duty on diesel apart from the Rs2 per litre cess for highway construction. Custom duty is 2.5 per cent.

State-run Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum are losing Rs333 crore per day on selling diesel, LPG and kerosene below cost, officials said.

"The oil marketing companies (OMCs) are currently incurring under-recoveries of Rs9.27 per litre on diesel, Rs26.94 per litre on PDS kerosene and Rs260.50 per cylinder of domestic LPG," an official said.

The current sales price of these retail fuels in Delhi -- Rs41.29 per litre of diesel, Rs395.35 per 14.2-kg LPG cylinder and Rs14.83 per litre of kerosene -- is way below the imported cost of the fuel.

Petrol prices have risen by 33 per cent since they were freed from government control in June last year. The price of petrol in Delhi was Rs51.43 a litre when the government decontrolled the fuel on June 26, 2010. Today, it costs Rs63.70 a litre.