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Which State has Highest Tax on Petrol

Which state has Highest Tax on Petrol

In this article, we will talk about which state has highest tax on petrol in India 2022 ? Petrol prices play a vital role in the day-to-day life of Indians and Indian economy. In India there are nearly 293 million active vehicles and 97% of them are actually based on fossil fuels like diesel and petrol which are made up of crude oil.

India is the world’s third-largest crude oil importer with exceeding amount of 100 billion $ crude imports. This shows that petrol is like the water for the economy, nobody focuses on it until it drys up by drought or somehow prices get increased. If you want to know how and why prices of petrol gets increased then read the content. Before that let’s take a look at which state has highest tax on petrol.

Which State has Highest Tax on Petrol?

State/UT Petrol
States Sales Tax/VAT
Andaman & Nicobar Islands 1%
Andhra Pradesh 31% VAT + Rs.4/litre VAT+Rs.1/litre Road Development Cess and Vat thereon
Lakshadweep Nil
Madhya Pradesh 29 % VAT + Rs.2.5/litre VAT+1%Cess
Maharashtra – Mumbai, Thane , Navi Mumbai,  Amravati & Aurangabad 26% VAT+ Rs.10.12/Litre additional tax
Maharashtra (Rest of State) 25% VAT+ Rs.10.12/Litre additional tax
Rajasthan 31.04% VAT+Rs 1500/KL road development cess


Currently you can see in this chart how much tax is imposed by all the states and UT of India. If you analysis this data you will find out which state or UT has the highest and the lowest tax imposed, but if you found it complex we will breakdown it for you.

This data shows which state has highest tax on petrol, Rajasthan has the highest tax with the amount of 33 Rs collected per litre followed by the Maharashtra with an amount of 30 Rs per litre, again followed by the Andhra Pradesh with 29.20 Rs per litre followed by the Madhya Pradesh with 26.90 RS of tax. These are the top states who impose the tax most on the petrol

If these are the highest who are the lowest? Well, Andaman and Nico Bar Island is the lowest. It imposes around 1 to 2.45 Rs as tax and Lakshadweep moved one step ahead and it does not impose any type of tax on any type of fuel

Petrol pump dealers get 3.85 Rs as dealership commission on petrol and 2.85 Rs as followed by diesel.

Now we will talk about the factors behind govt. imposing tax on petrol.

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Tax on petrol and diesel in India state wise

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Why does government impose tax on petrol?

Neighbouring countries like Sri Lanka, Pakistan, Nepal, Bhutan have the low rate of petrol compared to India. It is because the government imposed heavy taxes compared to other neighbouring nations.

Government impose and increase the tax for several reason like to support the several welfare schemes launched for poor section by government, to fund loss making PSUs, to bear the uncalculated and unpredicted cost.

However, these heavy taxes make the public pocket tight

Government is planning to lower the tax in the long term period. This will be beneficial for the public for the future, but for now the household budget will be tight.

As you know which state has highest tax on petrol and what is the reason behind govt. imposing a tax on petrol. Now, we will talk about factors affecting petrol prices.

Factors affecting Petrol Prices

  • Cost of oil in international markets

Price of crude has been set by the oil cartel group named OPEC, where there are 15 countries as members who produced 82% of total global oil production and held 70% of total global oil reserve which is led mainly by the Arab countries

  • Tax rates

In India state and central government both impose the tax on the final retail product of crude oil which is petrol and tax is known as VAT (Value Added Tax) or sales tax by state government and excise duty by the central government. Check out the tax rates and which state has highest tax on petrol in the previous section.

  • Supply and demand

Oil refinery face a problem in India that if the input cost is higher than the supply may be low and if the supply is low, it will affect the price of petrol and if the supply of petrol is increased then it can decrease the price of oil which will impact on oil company’s profit. Oil companies are being told to maintain the 6-week oil supply with them which also affects the price of petrol.

  • Logistic problem

There are several places where the oil refinery has to deliver their oil on time which is very far from their refining unit like Ladakh, Arunachala Pradesh, Nagaland and many more which eventually increase the transportation cost of the petrol.

Different tax that impact petrol prices

The impact of change in the price of petrol minorly determines on the international market, logistics, supply and demand but majorly the price of petrol is controlled by government with the help of taxes.

As of now the total petrol price paid by the end consumer on retail outlets 55% to 60% of the price has been paid as the taxes to the central government and state government which means that the base price of the petrol and other things is hardly of 45% to 40%

Explain it by example like in Delhi the current price of petrol is 95.41 per litre from which central government tax is 27.90 to 27.20Rs/L and state government tax is 19 to 20.20R/L and the dealership cost are 4Rs logistic cost is 0.5 Rs others are the base price of oil. In this bifurcation we can see that the tax accounts for 50% to 55% of total cost

As of now the oil has not been added to the GST, so the state has the rights to decide how much tax should be levy on petrol. From 16th of June in 2017 the central government has deregulated the price of fuel which means that the price of fuel gets changed every 24 hours and the timing of changes is from 6a.m of the morning.

That’s all about the topic which state has highest tax on petrol in India 2022. Visit Itzeazy to know more.

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