Truth test | No, state governments do not levy extra taxes on gasoline than facilities

Several social media users have shared a “resolution” on fuel prices claiming that state governments levy twice as much taxes on gasoline as the center does. Several Twitter users posted this viral claim. Fuel prices have soared to record highs and the central government has come under criticism from various sections, including opposition parties, which have held protests across the country.

The claim is also widespread on Facebook.

[Viral text: All Petrol Pump should have a board like this: Basic rate 35.50 Central government 19.50 State Government 41.55 Dealers 6.50 Total 103.05 Then public will understand who is responsible share it with your groups and friends.]

Alt News received several confirmation requests for the news.

It was recently reported that India is the third largest crude oil importer in the world. The country imports 84 percent of its oil needs. Fuel prices in India change every month or even daily due to external factors like global crude oil prices. But internal factors such as taxes and dealer commissions also affect the price of domestic gasoline.

Petroleum Planning & Analysis Cell (PPAC) says in the FAQ section, “Fuel prices are set by the Public Sector Oil Marketing Companies (OMCs) that is Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited with the changes in international Market prices and other market conditions. “

According to ICRA Limited, a credit rating agency of the Indian government, the consumption of unbranded gasoline in FY21 remains unchanged at 32.9 rupees / liter. This is also known as excise tax, which is levied by the central government. Speaking to Alt News, Prashant Vasisht, Vice President and Co-Group Leader at ICRA said: “The last change in excise tax was in May 2020 by the central government. In contrast to international fuel prices, this does not change daily. It is determined by the central government. “

The fuel tax is not covered by the goods and services tax (GST). Hence, fuel prices in India vary from state to state and even city to city. For the latest retail fuel prices in major cities, visit the PPAC website. To explain the price breakdown, according to Bharat Petroleum (BP), this article analyzes fuel prices in the state capital as of July 1st.

The latest state taxes are listed on the PPAC website under the Sales Tax subsection. Taxes in most countries are between 20 and 25 percent. The highest tax rate on fuel is in Manipur (36.50 percent VAT), followed by Rajasthan (36 percent VAT + Rs 1500 / KL road construction) and Karnataka (35 percent sales tax). The lowest tax rate in the Andaman and Nicobar Islands is 6 percent. No other state levies sales tax or value added tax in the single-digit range.

Bharat Petroleum announces the following price increase for gasoline in Delhi as of July 1st.

Price charged to dealers (excluding excise tax and VAT): This is the price that OMCs charge the dealer. Vasisht stated, “The price billed to dealers (as mentioned in the auto fuel price structure) is based on trade parity price (TPP) and includes a freight component. The TPP is calculated from 80 percent of the import parity price plus 20 percent of the export parity price. ”According to PPAC, the import parity price (IPP) represents the price that importers would pay in the event of an actual product import in the respective Indian ports. These include FOB price, ocean freight, insurance, customs, port fees, etc. While export parity price represents the price oil companies would get if they exported petroleum products. This includes the FOB price and the advance license benefit (for duty-free import of crude oil when exporting refined products).

Excise duty: This is the fee charged by the central government, which is the same across the country. As of July 1st, the excise tax is 32.90 rupees per liter.

Dealer commission: According to the Mint, the dealer commission for gasoline and diesel is different and varies between 2 and 4 rupees / liter depending on the location of the pumps. “This amount goes to the gas station owners,” said Vasisht. Alt News spoke to a gas station owner in Delhi who confirmed the same, adding, “This is the source of income for gas station owners. It covers our operating costs such as salaries, water, electricity bills, etc. “

VAT: This is the fee charged by the state. In Delhi this is Rs 22.81 or 30 percent according to PPAC and BPCL. The tax is levied on the sum of the previous three components (dealer price, excise tax and dealer commission), i.e. 30 percent of 76.04 rupees = 22.81 rupees.

The study of excise duties and VAT in Delhi makes it clear that the Delhi government does not levy more taxes on fuel than the central government.

The sales tax in Delhi is 30 percent of Rs 76.04 = Rs 22.81. We have calculated the excise duty portion (before VAT) in Delhi (32.90 / 76.04 × 100) and it is 43.27 percent.

As already mentioned, the highest sales tax in Manipur is 36.50 percent. Thus, no state government levies more taxes than the central government.

Previously, Alt News recently released a report debunking the false claim that states levy 55 percent taxes on domestic LPG versus the center’s 5 percent. Domestic liquefied petroleum gas is taxed below 5 percent GST, which is shared equally between the state and the center.