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Friday, May 8, 2020

Find out why the government is offering petrol at Rs 18 for Rs 71, understand the whole math of petrol-diesel prices

The whole world is now paralyzed by the Corona virus. Even employed people have become unemployed today. It has had a devastating effect on the global economy. At the same time, crude oil prices are falling sharply. The current situation is such that a few days ago, the futures price of crude oil in the US market turned negative. However, petrol is being sold at Rs 71.26 per liter and diesel at Rs 69.39 per liter in the national capital.

The big question now is why the price of crude oil in the global market is lower than that of water, but why are petrol-diesel prices skyrocketing in the country? Let us say that India imports 85% of its crude oil needs. Therefore, if the price of crude oil falls in the global market, it will fall in the country and if the price of crude oil rises, the price of petrol-diesel will also rise in the country. But this is not the case at present.

Let me tell you that not all the money goes to the oil companies when you have petrol proof of Rs 71. More than half of this goes to the central and state governments as part of the tax. According to a private media report, the ex-factory price or base price of 1 liter of petrol in Delhi is up to Rs 17.96.

The excise duty of the Government of India is Rs 32.98, freight and other expenses are Rs 32, dealer commission is Rs 3.56 and VAT of the state government is up to Rs 16.44. The state government’s VAT seems to be on the dealer’s commission. So the total price of petrol is Rs 71.26. The central and state government tax is Rs 49.42.

According to media sources, a similar tax is levied on diesel. The ex-factory price or base price on diesel is Rs 18.49. Central government's excise duty is up to Rs 29, freight and other expenses are up to 29 paise, dealer commission is up to Rs 2.52 and state government's VAT is up to Rs 16.26. This way the price of diesel goes up to Rs 69.39. Of this, the tax from India and the state government is Rs 48.09 per liter.

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