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Post GST, petrol prices shot up by 11.25% in Bengaluru

The retail prices of petrol and diesel have seen a steep rise of 11.25% and 8.46%, respectively, in Bengaluru over the last two months after the introduction of GST.

Petrol was retailed at Rs 71.47 per litre on Wednesday in Bengaluru, while diesel was sold at Rs 58.82 per litre.

When compared with the prices on July 1, which stood at Rs 64.24 per litre for petrol and Rs 54.23 per litre for diesel, the price increase works out to 11.25% and 8.46%, respectively.

Although the prices of petrol came down by Rs 3.37 per litre on July 1 as a result of removal of entry tax of 5%, the prices since then are on an upward curve. The rise in prices has come at a time when the crude oil prices are on a southward movement, owing to tinkering of tax rates. The widely consumed crude product attracts a tax of 132.58%, including excise and VAT. While the cost of crude oil is Rs 20.19 per litre, it increases to Rs 29.53 per litre after refining.

In case of diesel, post refining price stands at Rs 29.12 per litre. On June 27, 2008, when world crude prices touched a record high of $141 a barrel, it cost India Rs 38.13 per litre of crude. The retail price of petrol then stood at Rs 50.56 per litre, while diesel was sold at Rs 34.80.

However, from June 18, the fuel prices in the country have been changing on a daily basis. Since then, the prices of the commodity have gone up from Rs 69.32 to the current level.

“We faced a loss of Rs 2.5 lakh on July 1 when GST came into effect,” a dealer in Bengaluru told DH on condition of anonymity.

If various dealers are to be believed, it took them almost one and a half month to recover from this loss.

The price of fuel at the retail station comprises the product cost, central government excise and taxes, state government taxes and operating costs and margin.

The end prices of diesel and petrol include Rs 2.79 per litre and Rs 1.78 per litre commission taken by dealers, respectively, along with a huge compilation of taxes.

The government, however, said the current prices were “affordable” and that the “knee-jerk reactions cannot dictate” the government’s fuel pricing policy.

Petroleum Minister Dharmendra Pradhan, who held an hour-long meeting with high-level officials, including from oil marketing companies, told reporters that the government will not interfere with the day-to-day functioning of oil companies.

Petrol and diesel products, which were kept out of the ambit of GST, draw huge amounts of tax. While excise duty on petrol is Rs 21.48 per litre, diesel attracts an excise of Rs 17.33 per litre.

This doesn’t end here. Petrol attracts 27% of Value Added Tax (VAT) on the basic price and diesel attracts a VAT rate of 16.75% as well as 25 paise of cess.