Explained: How states collect tax on petrol, diesel

NEW DELHI: Retail price of petrol and diesel are made up of mainly 3 components – base price (reflecting cost of international oil), central excise duty and state tax.
In fact, Central and state taxes form a major chunk of the price of petrol and diesel in India.
While, excise duty is constant for all over India, state taxes (sales tax and value added tax) vary depending upon the rates levied by different state governments.
These taxes make fuel even most costlier for consumers. Record high fuel prices across the country have been a major point of debate since long.
In November last year, the Centre had slashed excise duties on both petrol and diesel to bring some relief to end-use customers. Excise duty was reduced by Rs 5 per litre on petrol and Rs 10 per litre on diesel.