All About Petrol Tax in Bihar
State Government of Bihar reduced VAT on petrol and diesel by over ₹ 3 per litre to relieve Bihar’s residents from surging fuel prices. The upcoming segment summarises vital aspects of petrol tax in Bihar, so keep reading!
What Is the Petrol Tax Levied in Bihar?
The Central Government reduced excise duty on petrol by ₹ 5 per litre and requested other states to lower the same.
Following a similar line, Bihar Government reduced VAT on petrol in Bihar by ₹ 1.30 per litre.
Here is this table mentioned below that illustrates the tax-breakup of petrol tax in Bihar:
| Elements | Effective as of 21st October 2022 (in ₹ per litre) |
|---|---|
| Price charged to dealers | ₹ 57.35 per litre |
| Excise duty (levied by the Central Government) | ₹ 19.90 per litre |
| Average dealer commission | ₹ 9.39 per litre |
| VAT (levied by the State Government) | ₹ 22.53 per litre {24.37% of {30% surcharge on VAT of (fuel price charged to dealers + excise duty + avg. dealer commission)} |
| Retail Selling price of petrol at Bihar | ₹ 109.17 per litre |
(Note: The above table serves only as an example to explain the petrol tax breakup, with data taken from reliable and authorised sources that was last updated on 21st October 2022 . The actual prices, however, may vary as fuel price, dealer’s commission, cess and other such aspects change periodically.)
Who Levies VAT on Petrol in Bihar?
The Central Government imposes an excise duty (₹ 19.90 per litre) on petrol. At the same time, the State Government levies VAT on petrol which altogether sums up the petrol price in Bihar, along with additional factors such as cost for dealers, dealers’ commission etc.
What Are the Factors Affecting Petrol Tax in Bihar?
Here are the following factors that determine the petrol tax in Bihar:
1. Cost for Dealers
Oil Marketing Companies purchases and distributes crude oil. These companies charge a price to dealers after considering refining expenses, freight charges, etc. This price influences the purchasing cost of petrol.
2. Price of Crude Oil
Changes in the price of crude oil affect petrol prices in India. Oil reserves and their supply in future, international political relations, and demand and supply affect the price of crude oil.
3. Dealer’s Commission
Oil Marketing Companies give a commission to petrol pump owners, covering their income, profit, and expenses. This commission also determines petrol prices in Bihar and across the country.
4. VAT and Excise Duty
As stated earlier, VAT and excise duty are charged by State and Central Governments, respectively, influencing petrol prices in Bihar and the entire country.
5. Valuation of Indian Currency Against American Dollar
Alteration in the valuation of American dollars against Indian rupees influences petrol prices in Bihar and India because the transaction for purchasing crude oil from the international market is done in USD.
Is Petrol Tax Same in All Places of Bihar?
The State Government imposes an equal rate of VAT on petrol in Bihar. Hence, every motorist residing in Bihar pays a similar tax on petrol. However, petrol prices may vary across cities in Bihar.
The additional relief on petrol tax in Bihar, along with the reduced Central excise duty, will further lower the petrol price by ₹ 3.20 per litre. However, petrol tax and its price keep changing. Hence, it is essential to keep an eye on the latest updates.
Frequently Asked Questions
What are the additional factors that affect the petrol tax in Bihar?
Demand and supply of petrol and availability of refineries determine the petrol tax in Bihar.
How much tax was imposed by Bihar before reducing the same in November 2021?
As of October 2021, Bihar Government levied a VAT on petrol around ₹ 16.65 or 26% per litre (whichever is higher) along with a 30% surcharge on sales tax or VAT.