Diesel Price in Kolhapur
Diesel price in Kolhapur, a historic city in the Indian state of Maharashtra, varies on a daily basis due to the dynamic pricing model implemented in India since June 2017. With the introduction of the new pricing mechanism, India joins other developed countries such as Australia, Japan, USA and Russia. According to dynamic pricing model, diesel prices in Kolhapur should be revised by 6.00 a.m. every day by considering international crude oil price and currency exchange rate.
Components of Diesel Pricing in Kolhapur
Besides international crude oil prices and currency exchange rate there are other elements that make up diesel price in Kolhapur. While the two factors, affect diesel price on a daily basis, there are other components that make -up diesel price in India.
The domestic elements that affect diesel price on a daily basis are state and central government taxes, profit margins of fuel companies and dealers commission. Let’s look at each element in detail.
|Also Know: Petrol Price In Kolhapur|
Indian oil companies purchase crude oil from other countries which have rich oil reserves. The price of crude oil is dynamic in nature. It is primarily affected when there is a reduction in production in oil exporting countries and when the weather is not supportive to extract crude oil. Further, the demand for oil also affects the price of crude oil in global markets. Since dynamic fuel pricing is being implemented in India, any change in international crude oil price will proportionately impact the petrol price in Kolhapur.
Indian fuel companies purchase crude oil in international markets by paying in US dollars. When the oil reaches India, the price is then converted into Indian currency. Therefore dollar to rupee exchange rate, which represents the value of the dollar against Indian currency, would be considered on daily basis for computing diesel price in Kolhapur. If the dollar gains against Indian rupee, the price of crude oil increases. If Indian rupee gains against US dollar, diesel price in Kolhapur and other Indian cities will decrease accordingly.
At the domestic level, two major factors that are considered in computing diesel price are the state and central government taxes. While the central government levies excise duty on every litre of diesel sold in the country, the state government charges value-added tax (VAT), which varies from one state to another.
Other minor components involved in diesel pricing in India are the profit margins of oil companies and dealers commission. The Indian oil companies after purchasing crude oil from other countries, refine it to extract petrol, diesel and other fuel products. The companies thus add refining costs and transportations costs to the cost price of oil. Once they sell the refined oil to petrol dealers, they add station maintenance costs, oil transportations costs and others in the form of dealers commission to the cost price of diesel.
Taxes Levied on Diesel in Kolhapur
As discussed earlier there are two different taxes being levied on diesel. While the central government’s excise duty remains same across the country, VAT on diesel changes with respect to every state.
Currently, the central government collects an excise duty of Rs.15.33 per litre of diesel. The Maharashtra state government levies VAT of 24.86% on every litre of diesel sold in the state.
Frequently Asked Questions (FAQs) on diesel price in Kolhapur
- Who will decide diesel prices at pump level in Kolhapur?
- Why does diesel price in Kolhapur different from other Indian cities?
- Why does diesel price in Kolhapur change every day?
- What is the effect of GST on the diesel prices in Kolhapur?
Ever since diesel prices are deregulated in India, the prices of the commodity are being aligned to international crude oil prices. Diesel prices at petrol pumps are under the control of respective fuel companies. For instance, Hindustan Petroleum decides the pump price of diesel at all the petrol pumps in Kolhapur. Besides the price of Indian crude basket, the oil companies also consider the cost of transporting fuel to petrol stations and the cost of running a fuel pump.
The state government’s value-added tax (VAT) is one of the components that make up diesel price. Currently, the Maharashtra government levies VAT of 24.86% per litre of diesel. The same tax rate is applied in Kolhapur as it is a city in Maharashtra. Since the VAT rate varies from one state to another, diesel price is respective cities change accordingly. Hence diesel price in Kolhapur is different from the price in other Indian cities.
Diesel prices across India vary on a daily basis due to the dynamic fuel pricing mechanism being implemented in the country. The new model makes diesel prices in the country align with the international crude oil prices and currency exchange rate. To compute today’s diesel price in Kolhapur, the price of Indian crude oil basket and the closing currency exchange rate in the yesterday’s market will be considered.
GST or the goods and services tax is the new tax regime implemented in India to bring uniform tax structure across the country. However, GST is not applicable on all goods and services. Few products and services are kept outside the GST net including petrol and diesel. Hence, the effect of GST on diesel prices in Kolhapur and other Indian cities is zero.
Also Check Diesel Price in NearBy Cities of Kolhapur
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|Diesel Price in Hyderabad||Diesel Price in Nagpur|
|Diesel Price in Mangalore|
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