Press Esc to close

Half of what you pay for petrol is taxes

Last updated: 16 May, 2011
Shamsheer Yousaf , Bangalore, May 16, DHNS : 10:21 IST

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

More from this section
Most trending stories
Photo Gallery
A worker applies colour to strings which will be used to fly kites, by a roadside in Ahmedabad...

A worker applies colour to strings which will be used to fly kites, by a roadside in Ahmedabad...

A girl collecting fallen Chinar leaves at a Mughal Garden on the out skirts of Srinagar...

A girl collecting fallen Chinar leaves at a Mughal Garden on the out skirts of Srinagar...

Prakash Raj speaks during a press conference to launch a campaign against the social media troll...

Prakash Raj speaks during a press conference to launch a campaign against the social media troll...

Virat Kohli during a practice session in Nagpur ahead of the 2nd test match...

Virat Kohli during a practice session in Nagpur ahead of the 2nd test match...

Bhuvneshwar Kumar during his marriage with the childhood friend Nupur Nagar....

Bhuvneshwar Kumar during his marriage with the childhood friend Nupur Nagar....

Hockey prayers during their first practice session at the Kalinga stadium...

Hockey prayers during their first practice session at the Kalinga stadium...

Yuki Bhambri of India plays against compatriot Prajnesh Gunneswaran...

Yuki Bhambri of India plays against compatriot Prajnesh Gunneswaran...

Sikh devotees paying obeisance at the Golden Temple on the martyrdom day of Guru Tegh Bahadur...

Sikh devotees paying obeisance at the Golden Temple on the martyrdom day of Guru Tegh Bahadur...

Vehicles moving at snow clad road after snowfall in Lahau...

Vehicles moving at snow clad road after snowfall in Lahau...

Sehwag and Kaif at the announcement of the inaugural edition of St. Moritz Ice Cricket...

Sehwag and Kaif at the announcement of the inaugural edition of St. Moritz Ice Cricket...

Like us on Facebook

Copyright 2017, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523
Powered by Yodasoft Technologies Pvt. Ltd.