Different Types of Taxes on Petrol in Tamil Nadu

The combination of Central Excise Duty and Value Added Tax (VAT) is the total tax amount imposed on the petrol price in Tamil Nadu. Currently, the price for a litre of petrol in Chennai is Rs.100.79 (inclusive of all taxes). 

1. VAT levied by the state government is 13% of the sum of fuel price charged to the dealers, excise duty, and the average dealer commission. 

1. The prices may change periodically depending upon the fluctuation in taxes.
   

Petrol Prices Without Tax 

Who imposes the petrol tax in Tamil Nadu?

VAT imposed by Tamil Nadu government on petrol ranges between 12.50% to 16%. VAT is imposed by the state government and reduction in VAT results in low revenue collection by the state.

Excise duty is imposed by the central government which is consistent unlike VAT and as a result petrol price varies from one state to another.

What are the factors that influence the petrol tax in Tamil Nadu?

The following are the factors that affect the petrol tax in Tamil Nadu:

1. Demand and supply of fuel: The demand and supply impact petrol prices. If the demand is on the higher side, then price increases against the low supply of petrol.
2. Central excise duty and VAT:This predefined amount is imposed on petrol prices, which remain constant irrespective of the global crude oil demand. While VAT is variable in nature and is imposed on petrol prices along with other charges. Almost 52% of the petrol price comprise of taxes which increases the final price.
3. Crude oil price: India impost crude oil, hence, the crude price impacts the petrol prices in the country. The price of crude oil depends upon the global supply and demand, future oil reserves and other international issues
4. Value of Indian currency against the US Dollar: Crude oil transaction is done US Dollars and therefore, any change in Dollar value affects the valuation of Indian currency. The high value of Dollar means increased crude oil price which in turn increases the petrol price.
5. Availability of refineries: Refineries process crude oil to convert it into petrol. Fewer refineries in a state will reduce the petrol supply which will eventually result in increased petrol prices, if the demand rises.