Petrol Price in Jammu and Kashmir
Petrol prices in Jammu and Kashmir are revised on a daily basis similar to other states in the country. Petrol is extensively utilised by private vehicles which constitute two-wheelers and four-wheelers. In the recent past, fuel consumption in the State has increased significantly with the rise in vehicular density. Various components influence the revision in petrol prices in the State.
The daily revision method in petrol prices is known as the ‘Dynamic Fuel Pricing’ mechanism which takes into account the crude oil and currency exchange rate, and taxes and other operational costs. With more than 70% of crude oil being imported from oil-producing countries, petrol has become an essential commodity in the country.
What are the main factors which influence the change in petrol prices in Jammu and Kashmir? What is the computation of the petrol price in Jammu and Kashmir? How to track the current petrol price in the State? Let’s understand each of these questions and how it affects consumers across the State.
Major Factors Which Impact the Petrol Price in Jammu and Kashmir
While external factors include the crude oil rate and the US dollar exchange value, internal factors include taxes, profit margin and operational costs incurred by oil companies, and the commission to fuel station owners.
- Global Crude Oil Price: The crude oil price is dynamic in nature and fluctuates due to shifts in demand for oil especially in emerging economies such as India and China. Additionally, in times of geopolitical tensions, the cost of crude oil is disrupted. India purchases crude oil from oil-producing countries making crude oil an essential commodity in the country. The crude oil rate is the primary component while pricing petrol in a city. An instance of a rise in crude oil rate increases the petrol price and vice versa.
- US Dollar Exchange Rate: Trading of crude oil typically happens in US dollars and any fluctuations in the currency exchange rate over rupee impacts the cost to buy crude oil in the global market. When the US dollar depreciates over rupee, the cost to purchase crude oil in the international market decreases. Likewise, if the dollar appreciates over rupee, the crude oil rate increases. This translates to fluctuations in the petrol price in a state like Jammu and Kashmir.
- Profit Margin & Dealer Commission: Once crude oil is shipped to the country, it’s then refined and supplied across the country. State-run oil companies such as Indian Oil, Bharat Petroleum and Hindustan Petroleum operate more than 90% of petrol pumps across the state of Jammu and Kashmir. Prior to selling petrol at its Retail Selling Price (RSP), oil companies include their profit margin and other operational costs. Additionally, commission to dealers (petrol pump owners) is added to the final selling price of petrol. If these charges are revised, the petrol price differs accordingly.
- Taxes on Supply of Petrol: Currently, the supply of petrol attracts Centre’s excise duty and the respective State’s sales tax or Value Added Tax (VAT). Taxes on petrol form the largest component while pricing the fuel. The excise duty on petrol is Rs.19.48 per litre, while the government of Jammu and Kashmir levies VAT at 27.69%. A revision in tax rates leads to changes in petrol prices.
Why are Petrol Prices in Jammu and Kashmir Revised Daily?
As mentioned, petrol prices in Jammu and Kashmir and across the nation are revised every day. This method of daily revision is known as the ‘Dynamic Fuel Pricing’ mechanism. Under his method, fuel companies include the previous day’s crude oil rate and the US dollar exchange value to interpret the final selling price of petrol in a city. With this method, oil companies can pass on any benefit to the customer immediately. Also, if there’s a rise in crude oil prices, it is passed on to the consumer, which avoids losses to oil companies. Fuel companies update the current petrol price daily at 6:00 a.m. IST.
Before the ‘Dynamic Fuel Pricing’ mechanism was introduced, fuel companies used to follow the fortnightly pricing method. The average crude oil rate of the preceding fortnight and the currency exchange value is considered to fix the petrol price in a city. However, this led to losses if the crude oil rate increases as oil companies had to wait a fortnight to pass on the increase. Likewise, if the rate of crude oil decreases, customers had to wait a fortnight to take advantage of the lower price. Hence, the fortnightly mechanism was stopped and the ‘Dynamic Fuel Pricing’ method was introduced.
How to Find the Current Petrol Price in Jammu and Kashmir?
Now that we are aware of the factors which influence the change and the daily revision in fuel prices, let’s find out how customers can track the most recent petrol price in Jammu and Kashmir.
- Smartphone Apps: With the advent of smartphones, information is easily accessible. Oil companies have launched their respective mobile apps to offer the latest petrol price in a city. Bharat Petroleum has launched the ‘SmartDrive’ app, Hindustan Petroleum has introduced the ‘MY HPCL’ app, while India’s largest oil company, Indian Oil offers services through its ‘Fuel@IOC’ app.
SMS: For those looking to take advantage of the SMS service, the process below will enable customers to track the current petrol price in a city.
- Bharat Petroleum: SMS RSP Dealer Code to 9223112222.
- Hindustan Petroleum: SMS HPPRICE DEALER CODE to 9222201122.
- Indian Oil: SMS RSP DEALER CODE to 9224992249.
- Fuel Company’s Website: The respective fuel company update their website with the most recent petrol price in Jammu and Kashmir. Also, customers can track the current petrol in other cities in the country as well.
Calculation of the Petrol Price in Jammu and Kashmir
To understand how the petrol price is calculated, let’s take the petrol price recorded on 3 June 2018 in Srinagar, the capital of Jammu and Kashmir.
|1||Crude Oil Price + Freight Charges||$78.30 per barrel = Rs.32.98/Litre (considering $1=66.96 and 1 barrel oil = 159 litres)|
|2||Oil Companies’ Profit margin, transportation, refining, and other operational costs||Rs.8.10/Ltr|
|3||Centre’s Excise Duty + Road Cess||Rs.19.48/Ltr|
|4||Commission to dealers||Rs.2.53/Ltr|
|5||State’s Value Added Tax (VAT) + 25p Pollution Cess with surcharge||Rs.17.72/Ltr|
|Total||Retail selling price of petrol in Srinagar||Rs.80.80/Ltr|
Why is GST Not Applicable in Petrol in Jammu and Kashmir?
All goods and services come under the ambit of the Goods and Service Tax (GST); however, petrol and diesel have been exempted from attracting GST. Since the highest tax slab of the GST is lower than the current taxes which includes excise duty and VAT, the revenue could significantly reduce. Therefore, petrol and diesel currently do not come under the framework of the GST. If petrol comes under the GST, the final selling price of petrol will considerably decrease.
*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.