Petrol Price in Chhattisgarh

Petrol price calculation in Chhattisgarh is influenced by a number of factors. A primary determinant is the current per litre rate of crude oil globally followed by the USD-INR exchange rate for the day. The next crucial determinant for Chhattisgarh petrol-diesel rate is the oil marketing companies’ (OMCs) costs. These OMC expenses include operational charges, refinery costs, transportation costs, freight expenses, permit charges. After adding the retailer’s commission, a central excise duty and the state’s value-added tax (VAT) is also levied on all petroleum products in the country. This VAT differs from state to state across the country.

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As per reforms of the dynamic fuel pricing policy in June 2017, the petrol rates in Chhattisgarh state are revised every day. The Chhattisgarh diesel-petrol rate is updated every day at 06 am IST. The daily petrol prices in Chhattisgarh are calculated using the crude oil prices of the preceding day and the prevailing US dollar exchange rate. Once updated, the price is even flashed on the fuel boards across different petrol pumps in Chhattisgarh and the mobile apps of OMCs.

Earlier, fuel prices were revised on a fortnightly basis, i.e. on the 1st and 16th of every month. OMCs or Oil-Marketing Companies would revise fuel prices on the basis of the average fuel price of the preceding fortnight and the currency exchange rate. However, this fortnightly system had major drawbacks, mainly in terms of translating market volatility into end-user fuel prices. 

With the dynamic fuel pricing system, OMC losses are cushioned as any change in the global crude oil prices gets carried forward on a real-time basis to the dealers and customers. This system has also helped prevent big fuel price leaps that were common during the previous regulated regime. Since petrol prices in Chhattisgarh are revised daily, customers are better attuned to the prevailing market dynamics. 

Fuel and petrol prices currently do not fall under the ambit of the Goods and Services Tax (GST). Therefore, GST does not influence the petrol rates in Chhattisgarh. 

However, petrol prices in Chhattisgarh are affected by a different set of taxes. VAT is imposed on petrol sales by the state government, while excise duties are implemented by the centre. Both these taxes are significant players in determining petrol prices in Chhattisgarh. If the government was to extend the GST umbrella to include petroleum products, petrol prices in Chhattisgarh would drop. Given that the highest GST tax bracket is lower than the currently applicable VAT and excise duties on petrol, this price drop would be a natural consequence. 

Both the central and state government’s excise duty and VAT regimes are applicable to petrol and diesel sales in Chhattisgarh. In other words, the prices of petrol and diesel are affected by these taxes.

While the cost of refining diesel is much higher than petrol, historically, diesel prices have trailed behind petrol costs in India. The common rationale cited is that diesel is widely used in public vehicles like buses. Additionally, most tractors in India are powered by diesel and are used by farmers for agricultural purposes. Thus, the government subsidises diesel prices by taxing the fuel at a relatively lower rate than petrol. 

However, petrol is viewed as a fuel largely used in private vehicles. Thus, it attracts a higher tax - both at the central and state levels. As such, one litre petrol comes with an excise duty of ₹19.48 and a VAT charge 27.02%. Alternatively, one litre diesel attracts an excise duty of ₹15.33 and a VAT charge of 25.81%. This means that one litre petrol costs ₹7.01 more than one litre diesel in Chhattisgarh.