The Central Government's decision to reduce excise duty on petrol evoked similar responses from several states to lower VAT on this fuel. One such state is Tripura. To know more about petrol tax in Tripura, keep reading!

The Central Government imposes excise duty (₹19.90 per litre) on petrol, while the State Government levies VAT or sales tax (approximately ₹14.66 per litre) on petrol. Both these tax rates determine the petrol price in Tripura, besides additional factors like dealers' commissions, the demand for petrol etc.

Following factors are mentioned below that affect the petrol tax in Tripura:

1. Demand and Supply of Petrol

Two and four-wheelers are increasingly plying on Indian roads. This implies a higher demand for petrol in the market. However, the supply of petrol often falls short in the face of increasing demand due to factors like fewer refineries, higher input price of crude oil, etc. Therefore, more demand and less supply of petrol mean higher prices.

2. Price of Crude Oil

Global change in crude oil's price directly affects the purchasing price of petrol in the domestic market. The difference in the price of crude oil is subject to the alteration in its demand and supply, international political relations, future oil reserves and supplies.

3. Excise Duty and Sales Tax

As stated above, the Central Government imposes excise duty and each state government levies VAT or sales tax on petrol. Both these tax rates influence the petrol price.

4. Dealer's Commission

OMCs provide commissions to petrol pump owners, and this adds up to the petrol price in Tripura.

5. Cost for Dealers

HPCL, IOCL, BPCL levy a price to dealers to distribute crude oil after assessing freight charges, cost of refining etc. This price charged to dealers is an essential component that influences the petrol price in Tripura.

6. Valuation of Indian Rupees Against USD

India imports around 86% of crude oil, and the payment to purchase crude oil from the international market is completed in dollars, but expenses incurred are done in rupees. So the valuation of American dollars against Indian rupees is an essential factor in determining petrol price in India. For example, if the valuation of the American dollar increases, it will raise the price of crude oil and petrol at the same time.

Yes, the State Government levies a uniform VAT rate in Tripura. This denotes that every Tripura resident will pay a similar VAT on petrol. However, petrol prices may vary across cities based on the dealers' commission charged.

The excise duty reduction announced in November 2021 is the highest since its increase between March and May 2020. The Union Government requested states to curb VAT on petrol to make its price cheaper. The Tripura Government responded to it and reduced the petrol tax in Tripura, thus lowering the petrol price for 37 lakh of state residents. However, petrol prices fluctuate periodically. Therefore, make sure to keep track of the same.