State-Wise Fuel Taxation in India

Posted on: May 22, 2023 | 3 mins | Written by: HDFC ERGO Team

State-Wise Fuel Taxation in India

If there is one common thing that impacts all of us, that is fuel prices. Not only are we heavily dependent on fuel for our commute but also on transportation of goods and services. It is no wonder then that a bump in the prices can change economics considerably. Since it is one of the most valuable commodities, the tax on petrol and diesel is something that governments heavily rely on.

Since fuel prices have been at an all-time high for a while now, it does pinch the monthly budget and expenses of vehicle owners. If you are planning to buy a new vehicle or already own one, you might be interested in knowing the tax on petrol on diesel in India for different states.

However, the maintenance of the vehicles just does not stop at that. One has to consider the cost of third party car insurance and regular services. Together they can constitute a considerable amount. And given that the cost of buying a new vehicle has increased a lot over the years, it is good to be aware of these factors before taking a decision.

Impact of fuel price hikes on Citizens

The impact of price hikes on petrol and diesel is quite significant for Citizens. And there are different levels of impact as well. Here are some of the most prominent ones.

1. Misbalanced budget

If there is a hike in the price, people who own two and four-wheelers feel the impact immediately. Their monthly budget for fuel gets impacted. To counter this rise in fuel budget, people end up cutting expenses in other areas.

2. Inflation

A big impact of changes to tax on petrol and diesel in India is transportation. Since we rely considerably on road transport for goods, any changes will increase the price of other products. For example, vegetables, cooking oil, other grocery items, etc. This impacts a lot of industries since they rely on road transportation for raw materials. As the cost of transportation increases, the cost of products as well.

3. Vehicle sales

A direct impact of the rise in fuel prices is the lower demand for two and four-wheelers. As the price rises, lesser people opt to buy vehicles during this time.

States with the most expensive fuel in India

The price of petrol and diesel varies a lot depending on the state that you are living in. There are quite a few states where the cost of Petrol is more than Rs. 100 per litre. Here are the top 3 states where petrol is the most expensive in India.

1. Andhra Pradesh – Rs. 110.4 per litre

2. Maharashtra – Rs. 109.2 per litre

3. Telangana – Rs. 109.6 per litre

Similarly, here are the top 3 states where diesel is the most expensive in India.

1. Andhra Pradesh – Rs. 98.2 per litre

2. Maharashtra – Rs. 95.5 per litre

3. Telangana – Rs. 97.8 per litre

On the other hand, here are the top 3 states where petrol is more affordable.

1. Assam – Rs. 96 per litre

2. Punjab – Rs. 96.5 per litre

3. Uttarakhand – Rs. 95.28 per litre

Diesel is more affordable in the following 3 states.

1. Assam – Rs. 83.9 per litre

2. Himachal Pradesh – Rs. 83.3 per litre

3. Jammu and Kashmir – Rs. 85.15 per litre

It isn’t too surprising to see a lot of people from neighbouring states driving to the nearest fuel station to fill their tanks up if the neighbouring state offers fuel at affordable prices.

The reason for fluctuations across different states

There is a considerable difference between the cheapest and most expensive fuel in the country. From the above, there is approximately Rs. 14 and Rs. 15 difference between petrol and diesel prices respectively. There is a reason behind these differences. Here are four major components that drive fuel prices.

1. The base price of fuel

2. Excise duty on fuel

3. VAT or value-added tax

4. Commissions and charges for dealers

Two of these components, base price and dealer’s commission remain the same across the country. However, the other two change depending on what the individual states are charging. The tax on petrol and diesel is usually split among the central government and state government.

Fuel taxes in different states

State/Union Territory	Petrol (Prices are per litre) VAT	Diesel (Prices are per litre)
Andaman & Nicobar islands	1%	1%
Andhra Pradesh	31% + Rs. 4 VAT + Re. 1 road development cess	22.25% + Rs. 4 VAT + Re. 1 road development cess
Arunachal Pradesh	14.5%	7%
Assam	20.67% or Rs. 15.5 (higher of two)	18.62% or Rs. 11.75 (higher of two)
Bihar	23.58% or Rs. 16.65 (higher of two)	16.37% or Rs. 11.75 (higher of two)
Chandigarh	15.24% + Rs. 10/KL or Rs. 12.42 (higher of two)	6.66% + Rs. 10/KL or Rs. 5.07 (higher of two)
Chhattisgarh	24% + Rs. 2	23% + Re. 1
Delhi	19.4%	16.75% + Rs. 250/KL air ambience charges
Goa	20% + 0.5% green cess	17% + 0.5% green cess
Gujarat	13.7% + 4% cess on town rate	14.9% + 4% cess on town rate
Haryana	18.2% or Rs. 14.5 (higher of two)	16% or Rs. 11.86 (higher of two)
Himachal Pradesh	17.5% or Rs. 13.5 (higher of two)	9.96% or Rs. 7.4 (higher of two)

Since the prices of vehicles have also increased due to input costs over the last couple of years, it is even more important to opt for comprehensive car insurance . The higher cost of a car would result in higher repair costs. Thus, comprehensive car insurance can safeguard you against those. If you haven’t yet bought one, you can easily buy car insurance online . Buying car insurance online lets you leverage technology and find a policy that meets your budget and requirements.

Conclusion

Now that you are aware of the tax on petrol and diesel, you can take a better decision about buying a new vehicle. However, it is crucial to remember that the law mandates the purchase of third party car insurance at the minimum, or else you will end up paying hefty fines.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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