Crude is cheaper, why isn’t petrol? It’s the tax trick
On 1 March, petrol sold at ₹71.71 a litre in Delhi. On 6 May, it sold at an almost similar price of ₹71.26 a litre. Yet, the price of the Indian basket of crude more than halved from $50.90 a barrel on 2 March to $23.04 a barrel on 4 May. Mint probes why petrol prices haven’t dropped.
Why is the price same now as it was in March?
The base price of petrol as of 1 March was ₹32.61 a litre. It has since fallen to ₹17.96 a litre, reflecting the fall in oil prices. However, between then and now, the central government has increased the excise duty on petrol by 65%, from ₹19.98 a litre to ₹32.98 a litre, primarily on account of the rise in special additional excise duty and additional excise duty (road and infrastructure cess). This apart, the Delhi government has increased the value-added tax (VAT) on petrol from 27% to 30%. As a result, taxes on the commodity have jumped from ₹35.23 a litre to ₹49.42 a litre.
