All About Petrol Tax in Ladakh
The Central Government reduced excise duty on petrol by ₹5 per litre. Following the line, the Administration of Ladakh also lowered VAT on petrol, thereby reducing the petrol price in the Union Territory. This article summarises the petrol tax in Ladakh and additional aspects associated with it. So, if you are curious to know about it, keep reading!
What Is the Petrol Tax Levied in Ladakh?
The Administration of Ladakh revised the VAT rate on petrol and reduced it to ₹7.66 per litre.
This reduced excise duty and VAT on petrol had altogether slashed the petrol price in the UT by ₹13.43 per litre.
Take a look at this table mentioned below that highlights essential components such as tax rates charged by the Central and Administration of Ladakh, etc. that make up the petrol price in this Union Territory:
| 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 | ₹8.22 per litre |
| VAT (levied by the State Government) | ₹14.63 per litre {17.06% of (fuel price charged to dealers + excise duty + avg. dealer commission)} (an additional employment cess of ₹5 per litre and a reduction of ₹2.5 per litre is applicable) |
| Retail selling price of petrol at Ladakh | ₹100.10 per litre |
(Note: The above table serves only as an example to explain the tax breakup for petrol in Ladakh, with data taken from reliable and authorised sources as of 21st October 2022 . The actual prices, however, may vary as fuel price, dealer’s commission, cess and other such aspects change periodically.)
Who Levies Petrol Tax in Ladakh?
The Central Government imposes excise duty (₹19.90 per litre) on petrol, while the Administration of Ladakh levies VAT (approximately ₹14.63 per litre) on petrol. These two tax rates charged by both the authorities determine the petrol price in Ladakh, apart from additional determinants such as the price of crude oil, demand and supply of petrol, and dealers’ commissions.
What Are the Factors Affecting Petrol Tax in Ladakh?
Factors that affect the petrol tax in Ladakh are as follows:
1. Price of Crude Oil
Demand and supply of crude oil, international political relations, oil reserves and their supplies often change the price of crude oil. Any alteration in its price globally directly affects the petrol price in the domestic market.
2. Demand and Supply of Petrol
With the increasing number of vehicles plying on Indian roads, demand for petrol is also increasing. However, oil refinery companies often fail to meet this higher demand due to a lower supply of petrol. This raises the petrol price in India.
3. Dealer’s Commission
Oil Marketing Companies provide a commission to petrol pump owners, covering their income, expenses and profit. This commission charged by dealers affects the petrol price.
4. Cost for Dealers
Oil Marketing Companies purchase and distribute crude oil, and depending on refining cost, freight charges, etc., they levy a price to dealers. This price charged to dealers is essential in determining the petrol price in Ladakh.
5. Excise Duty and VAT on petrol
The Central Government charges excise duty, and each state government and Administration of Union Territories impose VAT on petrol. These tax rates are also vital components that make up the petrol price in Ladakh.
6. Valuation of Indian Rupees Against American Dollars
The exchange rate between Indian rupees and American dollars determine the petrol price in the domestic market since crude oil is imported from foreign countries, and the transaction is completed in dollars.
Is Petrol Tax Same in All Places of Ladakh?
The answer is yes, as the Administration of the UT levies an equal rate of VAT on petrol in Ladakh. However, the tax rate on petrol may vary in Ladakh over the period, impacting its overall price.
Ladakh was one of the places that had witnessed a significant reduction in petrol prices after reducing VAT on petrol in November 2021. However, as stated above, petrol tax in Ladakh may vary over the period, affecting its price. Hence, make sure to remain mindful of the latest updates about it.
Frequently Asked Questions
How much VAT did the Administration of Ladakh impose on petrol before reducing it in November 2021?
The Administration of Ladakh imposed a VAT of 24%, plus an employment cess of ₹5 per litre (a reduction of ₹2.5 per litre on VAT is applicable) on petrol before reducing it in November 2021.
What factors do state and UTs consider while calculating VAT on petrol?
State and UTs consider factors such as excise duty and dealers’ commissions before imposing VAT on petrol.