Here’s a crackdown on the surge in petrol prices – Why are the prices even rising?


Ever wondered why is the petrol prices on a rampant rise? Here is the reason!

Apart from the absolute increase in crude prices, there are a host of other factors playing its effect on the prices of petrol. Let’s dive in!

The increased value of dollar and the depreciated value of rupee is another reason why petrol prices are seeing an uptrend. This is the lowest value of rupee. Next is the VAT. The VAT imposed on the petrol and diesel is another reason why the prices are rising high. The increased freight charges of transporting oil is another addition to the cost.

Another fact which has come to the fore is that the price of petrol is divided into two halfs – one is the price of petrol and the other half is commissions or taxes. Who eats the most part of the prices we pay for petrol is the central government – which takes a central excise duty of close to Rs. 20.

Another factor is the VAT which goes to the state government. The government is trying to bring down the VAT for the pure relief of the citizens. The state of Rajasthan has reduced its VAT rate by 4% – its Vasundhara Raje led government has taken the burden of Rs 2000 crore on the exchequer to comfort the people.

Goa (16.66 per cent) charges minimum VAT while Mizoram (18.88 per cent) and Arunachal Pradesh (20.00 per cent) are second and third best, respectively. Maharashtra (39.12 per cent) charges maximum VAT on petrol. Madhya Pradesh (35.78 per cent) and Punjab (35.12 per cent) are the second and third state, respectively.

The news is also that petrol will soon be covered in the ambit of GST, which is believed to decrease the prices. It is the resistance of the state government which has kept petrol form coming in the ambit of GST.