Diesel Price in India
Diesel is one of the widely used fuel oils in India. Popular for its efficiency and mileage, the petroleum distillate is used to power motor vehicles and equipment installed with diesel engines or compression-ignition engines.
Just like its counterpart petrol, diesel powers many cars, buses, trucks, trains and other commercial equipment such as drilling machines, power generators and other pumping units.
Coming with a lesser price tag than petrol, diesel is one of the most preferred fuel across India. Transport sector is the prime consumer of diesel making it an essential commodity that could directly or indirectly affect the day-to-day life of every Indian citizen.
The price of diesel is hence an important component that people across the country would look out for. If you are one among those, below is an effort to keep you updated about the diesel prices in most major cities along with some information about what could possibly affect the prices.
We also try covering the most important updates about diesel and its prices to help you find anything and everything related to diesel under one roof.
Deregulation of Diesel Prices in India
In October 2014, diesel prices in India were deregulated, linking them directly to the international market rates. Prior to deregulation, diesel rates were regulated by the government.
The deregulation makes the diesel prices market determined without any government intervention. That means any fluctuation in the global crude oil prices will directly affect the retail diesel prices.
The deregulation helps the government to spend less on subsidies in an attempt to bridge the gap between global and domestic market prices.
It also promotes healthy competition among the oil companies, which will eventually benefit end users who can enjoy competitive prices and better service delivery.
Daily Revision of Diesel Prices or Dynamic Fuel Pricing
Following the diesel price deregulation was the introduction of daily revision of diesel prices or the dynamic fuel pricing model.
Came into effect on 16 June 2017, the dynamic fuel pricing model revises both petrol and diesel prices on a daily basis based on the previous day’s international crude oil price and currency conversion rates.
Prior to dynamic pricing, the revision used to happen fortnightly, i.e., on the 1st and 16th of every month based on the average international crude oil price in the preceding fortnight.
By adopting dynamic pricing India joined other developed countries like the US and Australia, where the pricing model is already in use.
The daily revised diesel prices will be updated by the fuel stations at 6 a.m. every day.
The move is to ensure that even the smallest benefit from the change in the international oil prices is passed to the dealers as well as to the end consumers on a daily basis. It will also bring transparency in fuel pricing and will minimise the impact on the dealers who often deal with fluctuating fuel prices.
Quarterly Diesel Price Trend in India between July and September 2018
|Opening date price||Rs.67.38 per litre||Rs.67.97 per litre||Rs.70.26 a litre|
|Closing date price||Rs.67.86 per litre||Rs.70.26 per litre||Rs.74.51 a litre|
|Highest price||Rs.68.51 per litre documented on the 16th||Rs.70.26 per litre documented on the 31st||Rs.74.51 a litre documented on 28th, 29th and the 30th|
|Lowest price||Rs.67.38 per litre documented on the 1st||Rs.67.97 per litre documented on the 1st||Rs.70.26 a litre documented on the 1st|
Diesel Price Trend in India in July 2018
- Diesel prices in India are revised every day by State-run Oil Marketing Companies (OMCs) under the dynamic fuel pricing methodology.
- To arrive at the selling price of diesel, oil companies include the global crude oil price and the exchange rate of rupee against the U.S. dollar.
- In accordance with the pricing mechanism, oil companies fixed the diesel price in Delhi, the capital of India, at Rs.67.38 per litre on the 1st of July - the lowest price for the month.
- Prices remained unchanged until the 5th before increasing it by 12 paise per litre on the 6th and continued to be hiked over the course of the first and second weeks.
- Diesel prices rose to touch the highest price on the 16th when a litre of the fuel was sold at Rs.68.51.
- Post the 6th, prices declined over the course of the third and fourth weeks; however, it never fell below the opening price of the month.
- By the end of the month, diesel prices in India in July declined to touch Rs.67.86 per litre on the 30th of the month.
- Diesel prices in India during the month of July grew by 0.71% attributed to the rise in crude oil prices in the global market.
Diesel Price Trend in India in August 2018
- On the 1st of August, the diesel price in India stood at Rs.67.97 per litre, an increase of 11 paise over the previous day. This was also the lowest rate registered during the month.
- Diesel prices continued to incline over the course of the first and second weeks due to the rise in the global crude oil prices.
- The increase in crude oil price is attributed to geopolitical tensions between the U.S. and Iran after the U.S. pulled out of the nuclear deal between the two nations.
- With Iran staring at sanctions by the U.S. administration, the oil supply declined in the global market prompting fuel prices in India and other countries to rise accordingly.
- There was let up in the rise in diesel prices over the third and fourth weeks due to incline in oil prices.
- By the end of the month, diesel prices rose to touch the highest at Rs.70.26 per litre on the 31st of the month, an increase of Rs.2.29 per litre compared to the opening price of the month.
- Diesel prices in India in August inclined by 3.37% influenced by the rise in crude oil prices in the global market.
Diesel Price Trend in India in September 2018
- The opening diesel price in September stood at Rs.70.26 per litre, the lowest diesel price for the month.
- Prices during the first and second week continued to rise over the incline in crude oil prices in the global market.
- Due to geopolitical tensions, crude oil was trading at a four-year high of $80 per barrel on the global market prompting fuel prices to increase across the globe.
- Apart from the rising crude oil prices, the rupee fell to a record low of Rs.72 over the dollar which affected the diesel price in the country.
- Certain states such as Rajasthan, Karnataka, West Bengal and Andhra Pradesh cut local tax or VAT on petrol and diesel offering some respite to consumers of those states.
- By the end of the month, diesel prices touched record levels and registered the highest diesel price of the month at Rs.74.51 per litre on the 28th and were kept unchanged until the end of the month.
- Overall, diesel prices inclined sharply by 6.04% influenced by the steep incline in the global crude oil price and the significant depreciation in the Indian currency over the U.S.
Quarterly Diesel Price Trend in India Between April and June 2018
|Opening date price||Rs.64.58 per litre||Rs.65.93 per litre||Rs.69.24 per litre|
|Closing date price||Rs.65.93 per litre||Rs.69.29 per litre||Rs.67.38 per litre|
|Highest price||Rs.65.97 per litre recorded on 24th||Rs.69.35 per litre recorded on 29th||Rs.69.24 per litre recorded on 1st|
|Lowest price||Rs.64.58 per litre recorded on 1st||Rs.65.93 per litre recorded from 1st to 11th||Rs.67.38 per litre recorded from 27th to 30th|
Diesel Price Trend in India in April 2018
- On 1 April 2018, the diesel price in India stood at Rs.64.58 per litre - also the lowest price recorded in the month.
- Fuel prices in India are revised on a daily basis under the ‘Dynamic Fuel Pricing’ mechanism. The diesel price is updated every day at 6:00 a.m. by fuel companies.
- Diesel prices in India continued to remain steady with a marginal increase in the prices influenced by a slight increase in the global crude or unrefined oil.
- Prices of petrol continued to rise in tandem with the crude oil rates although only a slight revision was done.
- The highest diesel price in India during April 2018 stood at Rs.65.97 per litre recorded on the 24th of the month.
- The diesel prices trend in India during April 2018 inclined by 2.09%. The incline in diesel prices is in tandem with the rise in global crude oil rate.
Diesel Price Trend in India in May 2018
- With the 2018 Karnataka Assembly Elections scheduled for the 11th, fuel companies abstained from revising diesel prices in India.
- The diesel price in India in May 2018 stood at Rs.65.93 per litre, also the lowest diesel price for the month.
- Diesel prices in the second and third week grew in tandem with the global crude oil rates.
- On 29 May 2018, diesel prices in India touched an all-time high of Rs.69.35 per litre. Prices had increased by Rs.3.42 per compared to the first day’s price.
- The rise in diesel prices in India as the crude oil price touched $80 per barrel due to geopolitical tensions over the potential disruption in supplies.
- Despite a slight decline in diesel prices in the last two days of the month, fuel prices reflected an upward trend of 2.09% during the course of the month.
Diesel Price Trend in India in June 2018
- With diesel prices soaring, the Organisation of Petroleum Exporting Countries (OPEC) and Russia decided to meet on 22 June 2018 to address the concerns of a rising diesel price across the globe.
- On 1 June 2018, the diesel price in India stood at Rs.69.24, which is also the highest petrol price of the month.
- With geopolitical tensions easing, the global crude oil rate fell marginally and oil companies revised diesel prices accordingly in India leading to a slight decline in diesel prices in the country.
- The OPEC and its key ally Russia during their meeting agreed to raise the production of crude oil to soften the rising oil prices.
- Diesel prices in India started to decline in tandem with the crude oil price. The diesel price fell to its lowest at Rs.67.38 per litre on 27 June 2018 and continued till the end of the month.
- Overall, the diesel price trend in June 2018 showed a downward trend of 2.67% as the output of crude oil was increased as well as due to the ease in geopolitical fears.
Quarterly Diesel Price Trend In India Between January And March 2018
|Opening date price||Rs.59.76 per litre||Rs.64.09 per litre||Rs.62.30 per litre|
|Closing date price||Rs.64 per litre||Rs.62.13 per litre||Rs.64.40 per litre|
|Highest price||Rs.64 per litre recorded on 31st||Rs.64.20 per litre recorded on 6 & 7||Rs.64.40 per litre recorded on 31st|
|Lowest price||Rs.59.76 per litre recorded on 2nd||Rs.62.12 per litre recorded on 25||Rs.62.30 per litre recorded on 1st|
Diesel Price Trend In India In January 2018
- Diesel price in India on 1st of January 2018 stood at Rs.59.76 per litre, which was the lowest price of diesel for the month.
- While the cost of diesel continued to remain steady in the first week, it increased slightly in the second week of the month by nearly a Rupee.
- In the third week of January 2018, the price of diesel increased to Rs.61.74 per litre 15th. The rise in price was attributed to the hike in the global crude oil prices by nearly 1.76%.
- In relation to the increase in prices of WTI Crude and Brent Crude, the price of diesel continued to spiral to its highest at Rs.64 per litre on the closing day of the month.
- Overall, the diesel price for the month reflected an upward trend at 6.72% owing to a higher global price of crude oil and a slight decrease in the USD/ INR exchange rate.
Diesel Price Trend In February 2018
- The cost to buy a litre of diesel in India on 1st of February stood at Rs.64.09, an increase of 9 paise over the previous day.
- While the price of diesel continued to rally at a steady pace, it was at its highest at Rs.64.20 per litre on 6th and 7th of the month. The slight increase in the diesel cost was directly in proportion to the increased demand for the crude oil in global markets.
- Towards the second and third week of the month, diesel prices fell significantly recording their lowest of Rs.62.12 per litre on 27th of the month.
- The reduction in the price of diesel was attributed to the increase in INR value over the USD in the last couple of days of the month. Additionally, the Indian Basket rate fell from $65.12 per barrel on 26th to $63.99 per barrel on the last day of the month, which impacted the rise in cost of diesel.
- On the closing day of the month, diesel price stood at Rs.62.13 per litre.
- The prices of diesel for the month of February 2018 witnessed a downward trend at 3.15%. The downward trend in the prices of diesel was impacted by the fall in the international crude oil prices.
Diesel Price Trend In March 2018
- On 1st of March 2018, the price of diesel stood at Rs.62.30 per litre. Despite an increase over the previous day, this was the lowest price of diesel for the month.
- During the first week, the cost of diesel continued to remain stable, but with a short spike in cost on the 6th and the 7th of the month, nearly 70 paise over the opening price for the month.
- From the second week, diesel prices continued to decrease before it began to increase in the third and fourth week of the month.
- The increase in the cost to buy diesel was attributed to the hike in crude oil prices, which stood at $62.04 per barrel on the 14th and gradually increased to $66.80 per barrel on the 26th.
- With the excise duty and Value Added Tax (VAT) rates remaining unchanged by the Central and State Government respectively, the price of diesel continued to cost in sync with the change in the price of the crude oil.
- Diesel price on the closing day of the month stood at Rs.64.40 per litre, which was the highest in the first quarter of the calendar year.
- The diesel price in March 2018 reflected an upward trend of 3.34%, mainly indicated by the increase in global crude oil prices per barrel.
How to Find Diesel Price Every Day?
With the daily revision of fuel prices in place, you may have to pay different price every time you fill your vehicle. While the prices in the automated fuel stations will be changed centrally, the non-automated pumps have to change them manually.
The non-automated fuel stations and consumers can access the updated daily price through various means such as –
- Mobile app – By downloading apps of state-owned oil manufacturing companies (OMCs), one can fetch daily updated prices of both diesel and petrol at all cities in India. Fuel@IOC is the mobile app of Indian Oil Corporation (IOC), SmartDrive is for Bharat Petroleum (BP), and for Hindustan Petroleum (HP) it is MYHPCL.
SMS service – Consumers can send a text message in a specific format with the dealer code to get the daily diesel price at specific fuel stations
- For IOC dealer diesel price, sms RSP< SPACE >dealer code to 9224992249
- For BP, RSP< SPACE > dealer code to 9223112222
- For HP, HPPRICEdealer code to 9222201122
The dealer code is usually displayed at the fuel stations, in the absence of which consumers can ask for the same at the station or get it from the respective OMC website.
- OMC’s Websites – Customers can also visit the official websites of respective OMCs to find the diesel price.
Various Components That Add up to Diesel Price in India
Though diesel is widely used across the country, very few customers actually know that the price of the diesel when purchased in crude form is less than half the price of what they typically pay at the fuel station?
Yes, when Indian oil manufacturing companies (OMCs) import crude oil (raw material for petrol/diesel) from other countries, they pay a nominal price per litre. Many a times it is less than Rs.25 per litre. Then what is adding up to make it thrice the original price.
Well, there are more than a couple of components that add up to the actual fuel price making it heavier on Indian pockets.
The components that contribute to the retail selling price of diesel include –
- Cost of crude oil + cost and freight (C&F) charges
- Refinery transfer price (RTP)
- Price charged to dealers
- Central and state taxes
- Dealer commission + other charges
- Cost of crude oil + cost and freight (C&F) charges
- Refinery Transfer Price (RTP)
- Price charged to dealers
- Central and state taxes
- Dealer Commission + other charges
India is the third largest oil consumer in the world. According to Petroleum Planning and Analysis Cell (PPAC), the country’s fuel consumption grew to 194.2 million tonne (Mt) in 2016-17. Of the total, diesel consumption accounts to 74.6Mt, making it the most consumed fuel.
Despite being one of the major oil consuming nations, India produces only 25% of its total crude oil requirements. As a result, the country has been increasingly depending on crude oil imports which meet nearly 76% of its requirement.
Most of the oil is imported from OPEC nations including Saudi Arabia, United Arab Emirates, Nigeria, Iraq, Iran, Kuwait, Angola, Malaysia, Indonesia, and off-late from the United States.
The journey of diesel, thus, begins with the purchase of crude oil from other countries which usually sell the oil in barrels for US dollars.
Indian OMCs pay the crude oil price plus the cost and freight charges to the foreign oil companies, which forms the base rate of the oil.
The purchased crude oil is then sent to the refineries for further processing to extract petrol and diesel. The OMCs pay a certain amount of fee to the refineries for every litre of petrol/diesel processed. The fee is called refinery transfer fee (RTP).
The OMC then sells the refined diesel to local dealers, which are usually fuel station owners, by adding some profit margin to the actual cost. From then the dealers become owners of the fuel.
The dealer then adds two different taxes - the Central Excise Duty levied by the Central Government and the Value Added Tax (VAT) imposed by the state government. While the excise duty remains fixed across India, VAT is something which varies from state to state. The variation in fuel price from state to state is mainly because of this component.
The final step is to add dealer’s commission and the air ambience charges to get the final retail selling price of diesel. The variation of diesel price from fuel station to station is mainly due to variation in dealer’s commission and other transportation charges involved.
Price Break up of Diesel
The data is as on 24 Sep 2017 in Delhi at IOCL retail pump outlet
|Components of Diesel Price Break-up||Unit|
|Cost & Freight (C&F) Price||$/bbl||68.92|
|Average Exchange Rate||Rs/$||64.09|
|Trade Parity Landed Cost Based on Daily Pricing Methodology (Price paid OMCs to refineries)||Rs/Lt||28.16|
|Marketing Cost, Margin, Freight and Other Charges||Rs/Lt||2.06|
|Price Charged to Dealers||Rs/Lt||30.22|
|VAT applicable for Delhi @ 16.75% + Rs. 0.25/Lt pollution cess||Rs/Lt||8.67|
|Retail Selling Price at Delhi||Rs/Lt||58.72|
Let’s put everything in numbers:
On 24 Sep 2017, price of diesel in the international market is $68.92 per barrel (one barrel=159 litres).
The average exchange rate on the day is Rs.64.09 per dollar, which brings the cost price of one litre diesel to Rs. 27.78. As per the daily pricing methodology, the OMCs pay Rs. 28.16 per litre to refineries.
After adding their profit margin, marketing cost, freight and other charges OMCs sell it to dealers for Rs. 30.22 per litre.
The fuel station dealers then add excise duty of Rs. 17.33 per litre, commission of Rs. 2.50 per litre, VAT and pollution cess of Rs. 8.67 per litre and sell it to the customers at Rs. 58.72.
|Also Know: Petrol Price In India|
Factors Affecting Diesel Prices in India
Major factors that affect diesel price include – international crude oil price, exchange rate and taxes.
- International crude oil price: The primary factor that affects the diesel price is the crude oil price in the international market. The crude oil prices are typically determined by various factors including worldwide demand and supply, global economic conditions, seasonal and climatic changes, political instability in oil producing countries. Let’s look at them in detail -
- Increased demand: The same demand and supply phenomenon applies even for the diesel price. The higher the demand when the supply is short, the higher the price of diesel. Similarly, high supply and less demand will lead to reduction in prices.
- Seasonal and climatic changes: Whenever there is a change in season, oil refineries tend to conduct maintenance activities which may partially affect the production activities leading to lesser supply and higher price.
Severe weather changes or natural calamities such as cyclones and hurricanes may also affect both drilling and production activities leading to oil shortage. Sometimes transportation facilities are also affected resulting in less refined gasoline.
- Devaluation of US dollar: As crude oil is traded in US dollars and the dollar being the most stable currency, directly affects the global oil prices. Whenever dollar gains strength, there would be a drop in the value of oil and other dollar denominated commodities and vice versa.
- Political instability: Any geo-political tension that affects the oil production throughout the world or in the oil producing countries will show direct impact on the fuel prices. The recent tensions between the US and North Korea has significant impact on the dollar which in turn resulted in fluctuating fuel prices.
- Exchange rate: The crude oil is typically bought in US dollar, therefore, any change in India’s exchange rate and the US dollar will affect the buying cost of crude oil hence would impact the selling price in India.
- Central and state taxes: Whenever there is a change in state and central tax on fuels it would be reflected in the retail selling price of diesel. As different states have different VAT rate, the rate of diesel varies from state to state.
Trend of Diesel Price in India for past Six Months
As mentioned earlier, diesel price revision which used to happen fortnightly is now happening on a daily basis. As discussing about every day price only makes it lengthy, let us see the trend of diesel prices before and after dynamic fuel pricing is in place –
- Trend of Diesel Prices post Dynamic Fuel Pricing
- Trend of Diesel Prices before Dynamic Fuel Pricing (March to June)
Aimed to bring more transparency in fuel pricing and to benefit end consumer with even the slightest change in the oil price, the dynamic fuel pricing is still a matter of controversy.
Soon after the daily price revision system was introduced from mid-June, there was an immediate decline in diesel price. From Rs. 54.49 per litre on 16 June it continued to drop for 15 continuous days till it reached Rs. 53.33 on 1 July in Delhi. Since then, the price of diesel has been on rise, with the OMCs increasing it in small doses every day, except a few smaller cuts here and there. The price of diesel has risen by Rs. 5.39 per litre to Rs. 58.72 as of 24 September.
The increasing crude oil price is one major factor that contributed to the diesel price hike during the period. The price of one barrel of crude oil has seen an 18% increase from $58.06 on 01 July to $68.92 on 24 September. Hence the corresponding diesel price increase of over 10.10% in Indian market.
The last revision during the fortnight pricing happened on 15 June, when the price of diesel was cut by Rs. 1.24 per litre making it Rs. 54.49 per litre in Delhi.
On 1 June, the price of diesel was increased by Rs. 0.89 per litre to Rs. 55.94.
The month of May has seen two revisions including a marginal 44 paisa hike per litre of diesel on 1 May to Rs. 57.35 followed by a rate cut of Rs. 2.10/litre on 15 May.
On 16 April, diesel was at Rs. 55.61 per litre, Rs 1.04 increase from the previous revision and the revision towards the month end increased its price further by Rs. 2.94.
In the month of March, the price of diesel was cut by Rs 2.91 per litre bringing its cost to Rs. 55.61.
The change in the prices were majorly attributed to the global crude oil prices and the exchange rate.
GST and Diesel Price
There has been an ongoing discussion on bringing the fuel prices under the goods and services tax (GST), which subdues all indirect taxes levied by the state and central governments.
Some experts opine that bringing them under the new tax regime would lead to a reduction in prices as the majority of fuel price is constituted of central and tax rates.
- Taxes constitute more than 40% of the diesel price
- 386% tax hike in three years
- Bringing diesel under GST – The impact
As on 24 September 2017, diesel costs Rs. 58.72 per litre, of which Rs 26 goes to central and state government in form of excise duty and VAT. Which means taxes constitute 40% of the selling price of diesel making them another deciding factor after global crude oil price.
Between July 2014 and January 2016, the price of the crude oil in the international market slashed more than 70% from $106 per barrel to $26. With India importing more than 70% of its petroleum requirements, any change in the global crude oil prices should bring change to the selling price of diesel.
Despite 70% change in the global prices, the selling price of the diesel remained almost unaffected due to the incumbent government’s tax hike in a move to meet its revenue and fiscal deficit targets.
On 1 April 2014, the central excise duty on diesel was Rs 3.56 per litre, which in three years was increased by a whopping 386% to Rs. 17.33 per litre (as of 25 September 2017). Further, the state governments also revised VAT on diesel at various occasions.
The combined effect of central and state government taxes led to the continuous increase in diesel prices even when the crude oil has become cheaper by little less than half.
Petroleum products such as petrol, diesel, jet fuel and natural gas have been kept outside the purview of GST. If they are brought under GST, the prices may become substantially cheaper.
Currently, GST is applied in four tax brackets – 5%, 12%, 18% and 28%. Even after taxing petrol/diesel under the highest tax bracket that is 28%, the prices would come down at least by 22%. However, in a few cities where taxes are little lesser, the prices may go up.
Also check Today's Diesel Price in the most popular Indian cities
|Diesel Price in Delhi||Diesel Price in Kolkata||Diesel Price in Pune||Diesel Price in Mumbai||Diesel Price in Bangalore|
|Diesel Price in Coimbatore||Diesel Price in Chennai||Diesel Price in Hyderabad||Diesel Price in Ahmedabad||Diesel Price in Kerala|
Frequently Asked Questions on Diesel Price
- Why is diesel cheaper than petrol?
- What is diesel price made of?
- Why is diesel price different in different states of India?
- Why does diesel price vary from one pump to other?
- Who control diesel prices in India?
- Who are the major players in petroleum and diesel industry?
- What is fuel surcharge?
- What is fuel surcharge waiver on debit cards?
- What is fuel surcharge waiver on credit cards?
Though both diesel and petrol are derivatives of the same crude oil, the price of both the commodities vary in India. This is mainly because of the state and central taxes being levied differently for both the products. Even the dealer’s commission varies on both the commodities.
While the central excise duty on diesel in Rs. 15.33 per litre (as of 04 October 2017), it is Rs. 19.48 per litre on petrol. Similarly, the state levied VAT in Delhi is Rs. 8.67 per litre on diesel, whereas on petrol it is Rs. 14.96 per litre. Further, there is Rs. 1.07 per litre difference on the dealer’s commission for both the fuels, making a litre of diesel Rs. 11.67 cheaper than a litre of petrol.
In addition to the basic price of the diesel, other components that would make up diesel price are the central and state government taxes, OMCs and dealer’s profit margins and transportation charges.
While the central excise duty remains same across all the Indian states, the VAT is something that differs from state to state. For example, with Delhi government charging 16.75% VAT, the price of a litre of diesel in Delhi is Rs. 58.68, whereas with 24% VAT in Mumbai, it costs little higher at Rs. 62.33 per litre in the financial centre.
It’s mainly because of the cost of transportation and cost of running the fuel station involved. If the petrol pump is located close to the supply plant, the cost of transportation is less and hence the pump charges a lesser rate than other pumps which are located far from the supply plant. Also the maintenance cost of the pump including the salaries, rent and utilities would affect the pricing of the diesel at each petrol pump.
Also there is a price variation from one company pump to another, that is HP charges a different rate than its competitors IOCL and BP and vice versa.
The government of India used to regulate diesel prices till October 2014. From 19 October, diesel prices are linked directly to the international crude prices, hence they are being decided by the respective OMCs.
Each OMC prices diesel differently based on the transportation and other charges included, it is then up to the dealer to add other costs involved to run the pump as well as to supply the fuel, which finally adds up to the selling price of diesel.
Three oil marketing companies (OMCs) including Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) control more than 90% petrol pumps in India. Majority of the shares in the three companies are owned by the government of India.
The other private players who occupy a marginal market share include Shell, Reliance and Essar.
Each time a credit/debit card is swiped, a certain percentage of the transaction will go to the card issuing company as transaction fees. The fee is typically 2-3% of what the consumer pays and is usually absorbed by the merchant or the store where the purchase is made.
When it comes to petrol transactions, the fee should be ideally borne by the petrol pump dealers. However, as fuel businesses operate with little profit margins, the transaction fee is being passed to the consumers. Hence, the fee charged in addition to the actual fuel charge is called the fuel surcharge.
Whenever you swipe a card to purchase fuel, you will be charged with a fuel surcharge, along with the service tax levied on the surcharge.
In a move to promote digital payments post demonetisation, the government waived the fuel surcharge asking banks to stop levying surcharge on fuel transactions made through debit cards. The charge will neither be borne by the pump dealers but will be recovered by the card issuing banks from the OMCs, as per the Reserve Bank of India’s directive.
As credit cards still attract fuel surcharge, many banks have been offering cards with fuel surcharge waiver benefit. Customers using the card can avail either a complete fuel surcharge waiver, or a waiver within a certain limit per transaction or with a cap per month, depending upon the type of card and the issuing bank.
One thing to note here is you will still be charged with service tax levied on surcharge.
For instance, if you purchase Rs.1000 worth petrol using your credit card, you have to pay:
Rs. 1000+ fuel surcharge (2.5%) + tax on surcharge
= Rs. 1000 + Rs. 25 + Rs. 3.63 = Rs.1028.63
When your surcharge is waived, you have to pay the bill amount plus the tax, which is
= Rs. 1000 + Rs. 3.63 = Rs. 1003.63
*Disclaimer: BankBazaar makes no guarantee or warranty on the accuracy of the data provided on this page, the prevailing prices are susceptible to change and provided on an as-is basis. We accept no liability for any loss arising from the use of the data contained on this website.