Press Esc to close
Monday 27 April 2015
News updated at 2:17 AM IST
Weather
Max: 33.4°C
Min : 21.6°C
In Bengaluru
Sunny day

Half of what you pay for petrol is taxes

Last updated: 16 May, 2011
Shamsheer Yousaf , Bangalore, May 16, DHNS :

If there were no levies, you would pay Rs 37.04 a litre

Did you know that nearly half the amount you pay for petrol goes into taxes levied by the Central and the State governments?

The recent hike of Rs 5, announced by the oil marketing companies, has increased the share of taxes to around 47 per cent of the total price.

Petrol prices in Bangalore have gone up to Rs 71.09 per litre. Of this, Rs 17.06 goes to the Central government in the form of excise and customs levies.

Another Rs 16.63 goes into levies charged by the State government such as sales tax and entry tax. Put together, Rs 33.69 goes into just taxes every time you buy a litre of petrol. In contrast, the cost of crude petroleum, including the cost of transportation, comes to around Rs 36.18 per litre.

Prime source of revenue

The reason for high taxes is simple: excise tax and sales tax are prime sources of revenue for both the Centre and the State  government, respectively. Petrol is subjected to four levies: Central excise duty, customs duty, entry tax, and sales tax. An employee from an oil marketing firm said: “We can reduce the burden on the customers if both the Central and State governments reduce these levies.

However, governments have their compulsions in spending, and they cannot but charge the levies to meet the expenditure on the spending."

The Centre charges a fixed excise tax of Rs 14.35 per litre, and customs duty of 7.5 per cent on crude oil.

Further, the State government charges 25 per cent sales tax on petrol. Besides, it also charges a five per cent entry tax that is levied on every litre of petrol and diesel that enters the State.

The State government does not follow VAT for petrol, and instead follows an ad valorem system. This means that a rise in crude prices automatically increases the tax levied, furthering the burden on consumers. While the Union government has recently shifted from an ad valorem system to a fixed-rate system for excise tax, the State government is yet to adopt the same.

 


Go to Top

Photo Gallery
Smoke blew up when fire brigade personnel spray water to douse fire of a cloth store...

Smoke blew up when fire brigade personnel spray water to douse fire of a cloth store...

India's National Disaster Response Force personnel look for survivors in a building, in Kathmandu...

India's National Disaster Response Force personnel look for survivors in a building, in Kathmandu...

People look at the debris of one of the oldest temples after it was damaged...

People look at the debris of one of the oldest temples after it was damaged...

Tourists gather inside Nepal's Tribhuvan International Airport...

Tourists gather inside Nepal's Tribhuvan International Airport...

People gather near the cracks on the road caused by an earthquake in Bhaktapur...

People gather near the cracks on the road caused by an earthquake in Bhaktapur...

A Nepalese man walks through destruction caused by Saturday's earthquake, in Bhaktapur, Nepal...

A Nepalese man walks through destruction caused by Saturday's earthquake, in Bhaktapur, Nepal...

People run away from a landslide triggered by a tremor, after a 7.9-magnitude earthquake...

People run away from a landslide triggered by a tremor, after a 7.9-magnitude earthquake...

This photo provided by Azim Afif, shows a small avalanche on Pumori mountain...

This photo provided by Azim Afif, shows a small avalanche on Pumori mountain...

A view of collapsed houses due to earthquake in Madhubani, Bihar...

A view of collapsed houses due to earthquake in Madhubani, Bihar...

A general view of the Basantapur Durbar Square that was damaged in Saturday’s earthquake...

A general view of the Basantapur Durbar Square that was damaged in Saturday’s earthquake...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523