Context
The government indicated petrol prices will not rise immediately despite crude crossing $100 per barrel, as oil companies and tax adjustments can absorb shocks.
1. How Petrol & Diesel Prices Are Decided
• Linked to global crude price + rupee–dollar rate + refining and transport cost.
• Revised daily by oil marketing companies (Indian Oil, BPCL, HPCL).
2. Role of Taxes
Central Excise Duty (Centre)
• Fixed per litre (specific tax).
• Government reduces or increases it to manage inflation.
State VAT (States)
• Charged as percentage of base price plus excise.
• Petrol ~20–35%, Diesel ~15–25% (varies by state).
3. GST Status
• Petrol, diesel, crude oil, ATF and natural gas are outside GST.
• Taxed under excise plus VAT system; GST shift needs Council approval.
4. Current Situation
• Brent crude rose above $100 (peaked near $119).
• Government signalled no immediate retail hike.
• LPG refill booking gap raised to 25 days to prevent hoarding
