Indians pay over 100 % as tax on basic cost of Petrol

Opinions are divided that the latest price hike may affect the good and services delivered at the door

Hike in fuel prices has lately become a regular affair. In Maharashtra, petrol prices were hiked by Rs 3 per litre on Saturday. With the latest change, consumers in Mumbai end up paying Rs 77.50 per litre . However, it may come as a surprise to many that the cost of petrol supplied by oil companies inclusive of their marketing charges is Rs 29.54 per litre.

The remaining Rs 47.96 which is approximately 153% over original, is charged owing to a raft of duties and cess. These levies include central excise duty, state VAT, octroi, cess and commission for petrol pump owners, translating into 153 % in taxes. In Delhi, per litre petrol cost is Rs 68.76 which is still 132% over original price.

One of the reasons for this constant surge in prices, according to an analyst is that the unsustainable debt of Rs 4.13 lakh crore. It has reached a stage in which the government cannot afford to increase borrowings to fund additional expenditure, he told Times of India. Opinions are divided that the latest price hike may affect the good and services delivered at the door. However, others insist that a rise in petrol prices will not have any major impact on inflation considering it is not the fuel used by freighters and transporters. Others suggest, hike in petrol prices may even be a welcome step as it will dissuade people from using private vehicles and  may help decongest roads.

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