Last time when the oil prices were hiked by the Government, a barrel of oil was quoting at 100 US Dollars. The price of petrol at that time was around Rs 70.20 in AP.
A liter of petrol attracts the following taxes from the Government in my state AP after the price revision on 15.09.11. Prices in other states may differ slightly:
% Amount Rs.
1. Basic price including refining------------------- 49.25 36.20
2. Excise duty 24%---------------------------------- 24.00 17.64
3. VAT 9%------------------------------------------- 9.00 6.61
4. Petrol customs duty 3%------------------------- 3.00 2.21
5. Crude oil customs duty 2%--------------------- 2 .00 1.47
6. Education Tax 0.75%---------------------------- 0.75 0.55
7. Transportation 10%------------------------------ 10.00 7.35
8. Dealer commission 2%-------------------------- 2.00 1.47
TOTAL PRICE Rs 73.50
As you can see out of the Petrol price being charged from us a large percentage of the cost is on account of taxes which are given in no’s 2,3,4,5 and 6. Together they account for around 38% of the amount being charged from us. There may be some minor variations in taxes in different states.
In the year 2009-10 around 216,000 lakh litres of Petrol is produced/consumed in India. We can assume for comparison that the consumption would be the same for 2011-12 as well. The value of this @ Rs 70 per liter would be Rs 1,51,200 crores. The tax revenue accruing to the Government on this account would be 38% of this or Rs 57,456 crores.
Out of the Rs 3.14 hike now Rs 1.19 would go to the Government coffers by way of taxes. For the whole year this would translate to a tax revenue of Rs 2,570 crores to the Government.
Last time when Petrol price was hiked to Rs 70 (May 2011) the oil price was ruling at around USD 100 per barrel. It has now come down to around USD 88 per barrel. The government should have therefore brought down the prices of Petrol from Rs 70. They have conveniently forgotten that and have actually raised the prices now by Rs 3.14 stating the depreciation of rupee is causing losses to the government. True the rupee has depreciated by around 6% since the last petrol hike in May 11, but this is more than offset by the decrease in crude prices by 12% during the same period. Despite accounting for the depreciation of the rupee the crude price has registered a fall of around 6% since the last hike and hence the prices have to be brought down, but instead they have been increased.
The oil companies have given the amazing logic that they are incurring losses on account of the appreciation of the US Dollar. One wonders whether this is a deliberate ploy by the government to raise its tax revenues by additional taxation without the people actually realizing that they are being taxed. They are using the oil companies as a front to stifle the public outcry.
It is high time the Government switches over from the ad valorem duties on Petroleum products to specific duties as the taxation on them is already too high. They should also avoid resorting to higher taxation in the guise of rise in international prices.
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