Petrol Tax in Odisha: Different Types of Taxes Applicable on Petrol
The information in this article was last updated on 21st October 2022.
Odisha stands 11th with respect to population and is one of India’s north-eastern states. The state's growth rate is comparatively better than the national average in all aspects. Due to the presence of various resources, Odisha has flourished as a suitable location for overseas investment opportunities and industrial setups.
Fuel price and taxation has a crucial role to play in the development of transportation and industrial sectors.
Do you want to know about the details of petrol tax in Odisha? If yes, keep reading!
What Is the Petrol Tax Levied in Odisha?
The Odisha Government levies value-added tax (VAT) on petrol, which is a part of the final price. Since VAT rates are different for different states in India, petrol prices vary across the states.
The Central Government slashed excise duty on petrol in late 2021. Following, Odisha reduced the state-levied VAT on petrol, which now stands at 24.58%.
The petrol price remains slightly above ₹100, after the imposition of VAT by the Odisha Government. This price alters daily at 6 a.m. by a few paise, and all fuel stations of Odisha follow the same.
Here is a table comprising an approximate estimate of the petrol price in Odisha (as of 21st October 2022 )-
| 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 | ₹6.95 per litre |
| VAT (Levied by the State Government) | ₹20.70 per litre {24.58% of (fuel price charged to dealers + excise duty + avg. dealer commission)} |
| Retail selling price at Odisha | ₹104.90 per litre |
(Note: The above table serves as an example to explain the petrol tax breakup, 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. Check the latest petrol prices in Odisha).
Who Levies the Petrol Tax in Odisha?
The tax on petrol in Odisha mainly concerns the Central Government's excise duty and the Odisha government’s VAT. After the reduction of excise duty in November 2021, the Government of Odisha reduced VAT by ₹3 per litre. Both VAT and excise duty change periodically, causing a revision in petrol price.
What Are the Factors Affecting Petrol Tax in Odisha?
The rising prices of diesel and petrol have been a matter of concern in India. Many factors impact fuel tax in Odisha. Some of the significant factors are as follows-
1. Crude Oil Price
Crude oil is traded in the international market. A change in crude oil price causes a difference in the price of petrol in India. The price of crude oil varies with change in its supply and demand. Crude oil prices are also affected by future reserves and international political dynamics.
2. Price Imposed on Dealers
Crude oil is distributed and acquired by Oil Marketing Companies (OMCs). Petrol tax in Odisha gets affected by the fee charged to dealers by OMCs. This price, in turn, is dependent on refining cost, freight charges and so on.
3. Dealer’s Commission
Fuel dealers receive a commission from OMCs. The owners of petrol pumps have their profits, costs and earnings covered under this commission. This expense shows up in petrol prices.
4. Excise Duty
The excise duty of the Central Government is not a percentage but a predefined sum. As mentioned earlier, it fluctuates and changes the petrol price. Excise duty is not affected by a change in the price of crude oil.
5. VAT
Value added tax in a state gets altered due to change in excise duty, base price, commission of dealers, etc. Petrol tax, in turn, gets changed with VAT.
6. Fuel Demand
As oil refineries bring crude oil from international markets to process petrol, the supply of crude oil is not always sufficient. Due to increased demand and less supply, fuel price increases.
7. Number of Refineries
After importing crude oil to India, the refineries start processing it into petrol. If there are fewer refineries, the quantity of petrol available for sale would be lower. As a result, a lower supply would lead to a higher petrol price.
8. INR Against USD
Transactions involving the import of crude oil in India take place in dollars. The valuation of USD against INR is a significant factor altering petrol price. If the American dollar has greater strength, the expense for crude oil would be higher. Thus, the cost of finished products would also go up.
Is Petrol Tax Same in All Cities of Odisha?
The excise duty and state-imposed VAT on petrol remains uniform throughout Odisha. However, you will find slight differences in the overall retail price, based on the varying dealer’s commission across different petrol pumps.
Now that you are aware of the different components of petrol tax in Odisha and the different factors affecting it, it must be a little easier to understand the recent price fluctuations across the country. Knowing the latest tax rates can help you remain updated with the final prices in your city.
Frequently Asked Questions
What is VAT in petrol tax?
A value-added tax is a tax on a product, in which value is added at every stage of production. The collection starts from its initial production phase to the point of purchase. The VAT amount that a user pays equals product cost minus any material costs that are already included in a previous phase.
How does crude oil’s price affect petrol tax?
Petrol tax is directly proportional to changes in global crude oil price due to varying supply and demand.