What is the reason for this? And how do petrol and diesel prices go up 3 times with your reach? How do governments benefit from this? Let's understand ...
Find out how much the government earns from petrol
First, let's talk about how petrol and diesel reach you?
- India imports 85% more petrol than it needs, i.e. buys from other countries.
- Crude oil from abroad goes to the refinery, from where petrol, diesel and other petroleum products are extracted.
- Then it comes to oil companies, such as Indian Oil, Hindustan Petroleum. From here they make their profit and deliver to the petrol pump.
- The owner of the petrol pump adds his own commission after arriving at the petrol pump. The tax levied by the Central and State Governments is paid to the consumers at that price.
The state government earns by levying VAT (figures for the first quarter of 2020-21) (Source: ppac.gov.in) The central government earns by levying excise duty and different taxes. The state government also earns through you by levying VAT i.e. value-added tax. The same excise duty of the central government applies to the whole country, but if the state is different, the VAT rate also varies from state to state.
According to PPAC, the state government earned Rs 29,812 crore in the first quarter of this year through VAT, sales and various taxes. The Telangana government collects the highest VAT in the country. The tax here is 35.20% VAT on petrol and 27% VAT on diesel. It is followed by Tamil Nadu and Madhya Pradesh.
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