Fuel prices without taxes, what will be the real value & can they be reduced?

Fuel is a necessity that not even the most developed countries can deny, and also the most misused thing on the planet. It not only has the power to run any industry but can be even used to topple any government, especially in India where almost 98% of the population depend on fuel in some way or the other. But recently these fuel prices in India have reached their all-time highs, but have you ever wondered the reason behind this phenomenon that why each country have different fuel prices and what does government benefits from the massive taxes on these fuels and what will the prices be if these taxes are relieved?

Starting from the basics, a few years back the highest petrol price ever reached was about Rs. 100 and at that time people used to protest against it, then what changed now? As the fuel prices have even crossed the Rs. 100 mark in the capital. And if looking at the change in price prices in this year.

FY21 MonthsPrice of 1L of PetrolPrice of 1L of Diesel
January highest rateRs. 83.7 – Rs. 86.3Rs. 73.8 – Rs. 76.5
February highest rateRs. 86.3 – Rs. 91.2Rs. 76.5 – Rs. 81.5
August highest rateRs. 98.5 – Rs. 111.9Rs. 88.9 – Rs. 99.9
Fuel price comparison

The fuel prices have only been on an upward trend without falling a point and a jump from Rs. 83.7 to Rs. 111.9 isn’t in any case a small one. This is due to the daily revision system that the fuel companies in India run on that should allow a more transparent ecosystem but in reality, the Indian law also provides the state governments to decide the retail price of the fuel which allows them to price the fuel high even if the global oil prices are on a decline.

Let’s look at what would these fuel prices be if the state and centre governments removes the taxes on fuel.

ElementPrice (New Delhi)
Petrol price of publicRs. 92.58/litre
Freight levy (shipping charges)Rs. 0.37/litre
Excise dutyRs. 32.90/litre
Dealer commissionRs. 3.77/litre
VATRs. 19.32/litre
Deducted Final valueRs. 36.22/litre
Fuel prices without taxes

Rs.36.22/litre is the value only if all the bodies remove their profit which looks great but isn’t plausible while if we deduce only the taxes then the value turns out to be Rs. 40.36/litre which is also pretty amazing, but if only the government was so giving, but never the less price around it would have been ideal if the government only took minor portions for them.

Now the question arises, why does the government take such massive taxes on the fuel price? Are the Indian government deceiving us? The taxes collected as the levy excise duty and VAT covers almost 58% of the total cost paid by the consumers and adding to it the fuel inflation cost which in May was about 11.6% as compared to that of only 4.5% in March and 7.9% in April. However, even if the fuel inflation went down a lot, the prices of fuel never came down and when the inflation is at a rise the fuel prices at a rise too, so if the government wanted it could have reduced their tax collection at the time of higher inflation to fight the fuel prices as an excessive tax was collected at the time of only 4.5% inflation.

So, concluding the topic we have provided you with the proper information for you to understand that whether these rising prices could have been avoided or not, however, the finical verdict can be decided by you only.

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