Fuel Price in India

Excise Duty Levied by Central Government- It is a poignant point to note that the excise duty of the central government is not any percentage but predefined money. Hence the duty never changes according to the fuels' price. Over the years, the government has been increasing the number of excise duties.

Government Levied Tax - The government levies fuel tax in India on both diesel and petrol. Depending on certain policies, the center can change the structure of the tax. On recovery of the loss and marginal returns that are achieved from fossil fuels, the structural change is mainly dependent.

Fuel Demand - With the steadily increasing number of four-wheelers and two-wheelers on the roads of India, the need for both diesel and petrol is increasing. In India, the supply of diesel and petrol cannot always be fulfilled since the oil refinery businesses have to obtain crude oil out of the international market to process it into diesel and petrol.

Value Added Tax (VAT) Or Sale Tax - This tax is levied by the particular state governments. The VAT is computed with other few factors like excise duty that the center charges, the dealer commission, and many more.

INR Valuation Against USD - One of the major factors accountable for the alteration of the costs of diesel and petrol in the country is the Indian rupee value against the US dollar. As the international market supplies crude oil the transactions have to be processed in dollars which makes the USD strength against INR a direct aspect.

Price Imposed on Dealers - Crude oil is distributed and acquired by the OMCs Or Oil Marketing Companies. The other factors like the cost of refining, freight charges, and many more decide the fuel oil prices.

The Ratio of Consumption Refineries - The imported crude oil is sent for the process of refining. So if the amount of refineries is lower then the total quantity of diesel and petrol will also be lower, that indicates the less supply resulting in the higher new fuel prices.