Diesel Price in Jammu and Kashmir
Here, we make a deep analysis of diesel prices in Jammu and Kashmir, a north Indian state. We also discuss the impact of the recent developments such as GST and dynamic fuel pricing on the fuel industry in India. Unlike other states, the state of Jammu and Kashmir has two capitals: 1) Srinagar, the summer capital of the state; and 2) Jammu, the winter capital of the state. All the government offices will be shifted to Srinagar from May to October every year. Similarly, the state administration will be shifted to Jammu from November to April every year. It is because of the fact that the temperature in Srinagar will fall below the freezing point during the winter. Diesel price also differs in these two cities.
|Also Check: Diesel Price in Srinagar|
A Comparative Study of Diesel Price in Jammu and Kashmir
As on 1 January 2018, diesel was sold at Rs.60.72 a litre in Jammu and Rs.62.94 a litre in Srinagar. By the end of June 2018, diesel rate in Jammu increased to Rs.68.55 a litre and Rs.70.77 a litre in Srinagar. It means diesel rate in Jammu and Kashmir has gone up by Rs.8 per litre from January 2018 to June 2018 in tandem with the crude oil cost. The highest rate for the first six months of 2018 stood at Rs.72.58 a litre in Srinagar and Rs.70.36 a litre in Jammu. Market watchers have predicted fuel rates in Jammu and Kashmir will upsurge slightly.
Dynamic Fuel Pricing in Jammu and Kashmir
Across the state, diesel rates are revised under dynamic fuel pricing today. Dynamic fuel pricing is one of the biggest changes adopted by state-owned fuel enterprises such as Indian Oil (IOCL), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL). It significantly impacts the pricing of both petrol and diesel and provides extensive benefits to oil marketing companies (OMCs) and fuel consumers. Under this mechanism, the price of diesel per litre is revised on a daily basis considering the cost of unrefined oil per barrel and the USD/INR translation rate. All the automated and non-automated diesel distribution stations in the state will announce the revised fuel rate at 06:00 a.m.
Prime Attributes of Dynamic Fuel Pricing
- 100% transparency in fuel pricing
- A global fuel pricing mechanism
- Promotes automation drive for fuel companies
- Avoids huge variations in diesel rates
- Transmits even the smallest variations to diesel users in each part India
Tips for Obtaining Today’s Diesel Price in Jammu and Kashmir
|Mobile application||SMS service||Online|
|Indian Oil||Fuel@IOC, a mobile application developed by IOCL, helps you get the current fuel rate in your city.||Send an SMS in the following format: RSP DEALER CODE to 9224992249||Visit the website https://www.iocl.com/ to find the latest fuel price.|
|Hindustan Petroleum||Download and use My HPCL, a mobile application developed and provided by Hindustan Petroleum.||Forward an SMS in the following format: HPPRICE DEALER CODE to 9222201122||Visit the website http://www.hindustanpetroleum.com/ to obtain the current fuel price.|
|Bharat Petroleum||Get the latest diesel rate offered in your locality by downloading SmartDrive.||Send an SMS in the following format: RSP Dealer Code to 9223112222.||Get today’s diesel rate in Jammu and Kashmir by visiting https://www.bharatpetroleum.com/|
Steps Followed to Compute the Actual Cost of Diesel per litre in Jammu and Kashmir
Both diesel and petrol rates in India were fixed once a year in 80s and early 90s like the Indian Government presents its budget annually. India used the fortnightly-based system to fix fuel rates until June 2017. Under the fortnightly-based revision, there used to be big lapses in fuel rates. Therefore, it was decided to introduce the system of dynamic fuel pricing in the country to reduce the lag period to one day from 30 days. Diesel price in Jammu and Kashmir is computed in the following steps:
Step 1: Computation of crude oil per litre
Like discussed in the earlier section, the exchange rate and the cost of unrefined oil per barrel are required to compute the cost of a litre of unrefined oil. For instance, if the exchange rate of the USD against the INR is Rs.66 and the crude oil rate per barrel is $70 on 20 June, the cost of a litre of crude oil on 21 June will be Rs.29.05 (66X70/159).
Step 2: Computation of OMC expenses
Now, we have to add the total amount of overheads spent by oil marketing companies. OMC expenses cannot be the same on petrol and diesel. As on 3 June 2018, on diesel per litre, the overall amount of expenses incurred by fuel companies such as IOCL, BPCL and HPCL stood at Rs.10.
Step 3: Imposing taxes
Taxes are an integral part of diesel price in Jammu and Kashmir. They include Value-added Tax and excise duty. In India, diesel is a subsidised fuel since it is used by agriculturists. In other words, in Jammu and Kashmir, the taxes on diesel are lower compared to the taxes on petrol. On diesel per litre, excise duty and VAT stood at Rs.15.33 and 17.12% in the state.
Step 4: Commission for dealers
In each city, diesel is supplied through fuel dealers who are paid a fixed percentage of commission. As on 3 June 2018, the dealer’s commission on diesel per litre was Rs.2.53. This commission may be revised if needed.
Diesel rate in Jammu and Kashmir = Taxes + Crude oil rate + Pollution cess + OMC expenses
Factors Affecting Fuel Rates in Jammu and Kashmir
1. Exchange rate
An exchange rate is taken into account for overseas transactions. Buying crude oil is also an international transaction. So, the exchange rate of the Indian rupee against the USD makes a huge difference. When the USD gains against the INR, the crude oil rate will fall. On the other hand, if the USD depreciates against the domestic currency, which is the INR, the price of unrefined oil will increase. Any changes in the USD/INR exchange rate will affect domestic fuel prices in the end.
Like other commodities, tax is also imposed on diesel. In this state, a diesel buyer pays excise duty and VAT. The Central Government regulates the imposition of excise duty whereas VAT is charged by states. Excise duty has been changed several times by the BJP Government. If the government decreases or increases excise duty, diesel prices should be adjusted accordingly. For instance, when excise duty was declined by Rs.2 per litre in October 2017, the price of diesel per litre was also cut by Rs.2 per litre across the country.
VAT differs in each city. Thus, the price of diesel changes among Indian cities. Let’s consider a few Indian states to make a comparative analysis of VAT. As on 1 April 2018, on diesel per litre, VAT was imposed at 28.60%, 12.50%, 22.71%, 18.28%, 25.81% and 17.28% in Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Chhattisgarh and Delhi respectively. It was imposed at 17.12% in Jammu and Kashmir. Here, we observe a difference. Because of this difference, diesel prices in Srinagar and Jammu will differ from other cities such as Bangalore, Mumbai, Delhi, Ahmedabad, Ranchi, etc.
Impact of GST on Diesel Price in Jammu and Kashmir
Presently, Goods and Services Tax (GST) is charged at 5%, 12%, 18% and 28%. It is governed by the GST Council, which has not included diesel for tax purposes. Diesel has been kept outside the GST framework to keep the revenues unaffected. You may expect the inclusion of diesel under GST in the future.
*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.