Different Types of Taxes on Petrol in West Bengal

Total tax imposed on the petrol prices is a combination of Central Excise Duty and Value Added Tax (VAT). Currently, the price for a litre of petrol in Kolkata is Rs.104.99 (inclusive of all taxes). 

1. VAT levied by the state government is 24.20% of the sum of fuel price charged to the dealers, excise duty, and the average dealer commission. 

1. The prices may change periodically depending upon the fluctuation in taxes. 

Petrol Prices Without Tax 

Who imposes the petrol tax in West Bengal?

The final price of petrol is calculated by adding the excise duty and VAT along with other charges. The excise duty is imposed by the Central government and the VAT is added by the respective state government which makes the price of petrol vary from one state to another.

In West Bengal, the fiscal deficit, revenue deficit, and the debt to GDP in the financial year 2021 were 3.86%, 2.54%, and 35.54%, respectively. The Center has recently dropped the excise duty on petrol by Rs.5, which made many other states decrease VAT on petrol price, though West Bengal has not reduced the VAT as of now.

What are the factors that influence the petrol tax in West Bengal?

The following are the factors that affect the petrol tax in West Bengal:

1. Demand and supply of fuel: The prices fluctuate depending upon global fuel demand and supply. Against lower supply of petrol, the price increases if the demand is on the higher side.
2. Central excise duty: This is a predefined amount imposed on petrol that does not vary due to global crude oil demand.
3. State sales tax: This is the value added tax imposed by West Bengal state government on petrol prices along with other charges.
4. Dealer's cost: This is charged by the Oil Marketing Companies (OMCs) to the dealers that include freight charges, refining cost, and others.
5. Dealer's commission: The OMCs pay commission to petrol pumps that include income, profit, and other charges.
6. Crude oil price: The crude oil prices vary internationally depending upon global supply and demand, future oil reserves and other international issues.
7. Value of Indian currency against the US Dollar: Higher dollar value increases the cost of buying crude oil, which eventually increases the petrol prices.