Petrol and Diesel Prices
Distilled Policy Brief
- Retail prices of petrol and diesel consist of the price charged to dealers, central excise duty, dealer commission, and state sales tax or VAT, with taxes making up around 50% of the retail price.
- The central government levies a uniform excise duty on petroleum products, whereas state governments levy sales tax or VAT which varies across states.
- India's net imports of petroleum products increased from 69% of total consumption in 1998-99 to around 95% in 2020-21.
- As a result of increased excise duty in May 2020, central excise duty collection on petroleum products surged from Rs 2.38 lakh crore in 2019-20 to Rs 3.84 lakh crore in 2020-21.
🎯 Prelims High-Yield Examination Points
What are the components of petrol and diesel retail prices in India, including the division between central excise duty and state VAT?
⚖️ Mains Analytical & Syllabus Linkages
Analyze the impact of federal taxation on petroleum products in India and how high import dependency affects domestic retail fuel prices.
🎯 UPSC Prelims Practice Drill
Consider the following statements regarding the pricing and taxation of petrol and diesel in India: 1. The central government levies a uniform excise duty on petroleum products across the country. 2. State governments levy sales tax or Value Added Tax (VAT), the rates of which vary across different states. 3. Taxes imposed by the central and state governments constitute less than 20% of the retail price of petrol and diesel. Which of the statements given above is/are correct?
- [A] 1 only
- [B] 1 and 2 only
- [C] 2 and 3 only
- [D] 1, 2 and 3
▶ Reveal Official Answer & Analytical Explanation
Statement 1 is correct because the central government levies a uniform excise duty on petroleum products throughout the country. Statement 2 is correct as state governments levy sales tax or VAT, which varies from state to state. Statement 3 is incorrect because taxes (central excise duty and state VAT/sales tax combined) actually make up around 50% or more of the retail price of petrol and diesel, not less than 20%.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.