Tax timeline on fuel, how diesel is cheaper at 11.75 rupees per liter in Delhi without reducing VAT! – special tax on diesel gasoline and oil VAT collection process by delhi tuta state government

History highlights

  • Gasoline is cheaper at Rs 6.07 and diesel at Rs 11.75 a liter in Delhi.
  • State governments charge VAT on gasoline and diesel

The policy is at its peak in relation to excise duties and VAT on gasoline and diesel. The excise tax is collected by the central government and the VAT money goes to the state accounts. When you understand the entire gasoline and diesel tax structure, you will understand that the real policy is hidden there. Let’s understand the fiscal timeline for gasoline and diesel.

Actually, just one day before Diwali, the central government suddenly lowered the excise duty from Rs 5 on gasoline and Rs 10 per liter on diesel. After that, 10 states governed by the BJP, 6 states in alliance with BJP, and only those not governed by the BJP, Odisha announced a reduction of VAT on gasoline diesel from 2 to 12 rupees on their part.

These states have not used VAT scissors

Following the Center’s decision, some 16 states and 7 union territories in the country have announced to cut VAT on gasoline and diesel. But 13 states and union territories have yet to use VAT scissors. They include Maharashtra, Delhi, West Bengal, Tamil Nadu, Telangana, Andhra Pradesh, Kerala, Meghalaya, Jharkhand, Chhattisgarh, Punjab, and Rajasthan. Apart from this, VAT has not been reduced in Andaman and Nicobar either.

Delhi an example

Now let’s understand the fiscal timeline. There is an Aam Aadmi Party (AAP) government in Delhi and the decision to cut VAT has not yet been made here. Currently, gasoline in Delhi is Rs 103.97 per liter and diesel Rs 86.67 per liter.

After the reduction of excise duties, gasoline has become cheaper by 6.07 rupees a liter and diesel by 11.75 rupees a liter in Delhi. Now when the central government has reduced the excise tax on gasoline by Rs 5 a liter and on diesel by Rs 10 a liter, how has the price of gasoline got cheaper by Rs 6.07 and diesel by Rs 11.75 a liter? ?

Currently excise duty on gasoline: Rs 27.90 per liter

In fact, state governments charge VAT on gasoline and diesel. But the VAT rates are applied to the prices after the collection of the excise duty. That is, VAT is charged in addition to the excise tax and the base price. Currently, the excise tax on gasoline in Delhi is Rs 27.90 per liter. Before reducing the excise duty by Rs 5 per liter on November 3, the central tax on gasoline was Rs 32.90 per liter. For this reason, when the excise duty was lowered, VAT prices were automatically lowered. Because now the base price of VAT and excise duty in Delhi are charged at Rs 27.90.

Currently, a VAT of 30 per cent is applied to gasoline and 16.75 per cent to diesel in Delhi. That is, after adding the base price and the excise tax on gasoline, a VAT of 30 percent is applied. While on diesel, the VAT of 16.75 percent is applied in a similar way. Before 2015, VAT was charged at 20 percent on gasoline and 12 percent on diesel in Delhi.

Last year, during the Crown crisis, the government increased the excise duty due to falling oil prices. There was an increase of 13 rupees for gasoline and 16 rupees for diesel. The central government now applies a special tax of Rs 27.90 per liter on gasoline and Rs 21.8 per liter on diesel.

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