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MP, Gujarat & Mumbai lead in taxing petrol & diesel


With the financial year drawing to a close, Madhya Pradesh, Gujarat & Mumbai have emerged as the states where people pay the highest taxes on petrol and diesel, while Tamil Nadu was the state with the highest increase in rates this year.

In Madhya Pradesh, people pay an eye-watering 39.75% tax on petrol imposed by the state government. Added to a central government excise duty of Rs 21.48, the total tax on petrol paid by consumers in the central Indian state comes to 94.8%.

Over the last three years, the state has seen a 41% increase in its tax rate for petrol, going from 28% in Apr 2014 to 39.75% at present.

The second highest petrol prices are found in Andhra Pradesh, where the tax rate is 38.5%. Four years ago, the tax rate was 31%.

Together with central excise, the overall tax rate in the state is around 93.5%.

As many Mumbaikars may already know, they pay relatively high taxes as well. The state government’s tax on the fuel in the city, Navi Mumbai and Thane is 37%, and together with central excise, the total comes to around 92%.

In other words, out of the total price of about Rs 75 for a liter of petrol, taxes make up around Rs 36.

The cheapest places for petrol include Goa — where local taxes were reduced to 7.5% this year from 22% last year — and north eastern states such as Tripura, Mizoram and Arunachal Pradesh where people only 20%. The rates here have remained the same for several years, in contrast to the situation in other states.

In most states, the governments have kept increasing the tax rates every year (see chart below).

The biggest increase this year so far has been in Tamil Nadu. Here, the tax rate jumped from 27% last year to 34% this year.

DIESEL

The situation is largely similar for diesel as well, though the rates in this case are lower.

The highest tax is again in Madhya Pradesh at 31.3%. That, however, represents a decrease from 32% last year. Four years ago, the rate was 24.2% — which was still the highest in India.

Like in case of petrol, Andhra Pradesh occupies the second position, but unlike in case of petrol, Mumbai is not at No 3, but at No 4. The No 3 spot has been taken by Gujarat.

CENTRAL EXCISE, CUSTOMS

Like the state governments, the central government has also not missed an opportunity to increase taxes on petrol and diesel.

The central excise duty on petrol has been increased no less than 9 times in the last three years, averaging to one increase every four months.

However, much of the steep increase came in late 2014, which was also when the price of crude oil corrected sharply in the international markets.

A second spell of increases can be seen in late 2015 and early 2016 when crude prices fell again to $30 levels.

Three years ago, the central excise duty on one liter of petrol was Rs 9.48, which has steadily increased to Rs 21.48.

On diesel too, the excise duty has been increasing roughly once every four months.

It has risen from just Rs 3.56 per liter in April 2014 to Rs 17.33 per liter at present.

PLATEAU

 

With crude oil prices having increased in the last six months, some state governments have been forced to halt the expansion of taxes on petrol and diesel. When the price increases, state governments are able to get higher taxes even without an increase the tax rate, as the base expands.

The average rate of state levies on petrol fell to 28.05% this month from 28.5% in April last year.

On diesel, the simple average fell to 20.54% from 20.91% during the same period.

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