Diesel in Delhi will get cheaper as the Delhi Cabinet today decided to reduce VAT or value-added tax on the fuel to 16.75% from 30%. This will reduce price of diesel in Delhi from ₹82 to ₹73.64 or by ₹8.36 per litre, said Delhi chief minister Arvind Kejriwal. The Delhi government had in May hiked value-added tax (VAT) on the auto fuels. The Centre levies excise duty on the two auto fuels. It had also hiked excise duty sharply in May this year.
Currently, diesel retails at ₹81.94 per litre in Delhi while petrol at ₹80.43.
In India, the price of petrol and diesel you pay at the pump is dependent on international product prices and other market conditions. Petrol and diesel do not come under the purview of goods and services tax (GST).
Other factors in retail price of petrol and diesel include excise duty, VAT, marketing cost and margins, dealers commission etc.
Let us consider July 16th diesel retail selling price of ₹81.18 per litre in Delhi. According to Indian Oil website, the base price was ₹27.52 per litre. Add to it freight charges of ₹0.30 per litre, the price charged to dealers (excluding Excise Duty and VAT) comes to ₹27.82 per litre. Then add excise duty of ₹31.83 per litre, dealer commission (average) of ₹2.55 litre and VAT (including VAT on Dealer Commission) ₹18.98 litre. The final retail selling price in Delhi comes to about ₹81.18 per litre, according to Indian Oil website.