The prices of fuel products that you pay have reached a whole new level  in various state capital of India. This is especially so for diesel products. Meanwhile, petrol also has reached nearly seven-year high. On Wednesday, the Oil Marketing Companies (OMCs) decided to keep the prices of petrol and diesel unchanged compared to previous day’s valuation. The OMCs while deciding the prices of fuel, take into consideration the performance of international crude oil, adding government’s excise duty and various state’s value added tax (VAT), however, currently the state-owned OMCs face a difficult time in regards to trimming down fuel prices as they have limited room for it, which results in consumers ending up paying higher petrol and diesel prices. 

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Let’s understand what really is cooking and why are consumers made to pay higher amounts on their purchases of fuel products. 

Data displayed by Indian Oil Corp, showed that on Wednesday, petrol prices stood at Rs 73.95 per litre in New Delhi, almost nearing Rs 74 per litre mark - this was last recorded in September 2013. 

New Delhi was not alone in seeing hike in petrol prices, Kolkata and Chennai have reached near seven-year highs too. Petrol prices in Kolkata stood at Rs 76.66 per litre and Chennai at Rs 76.72 per litre - the last time both the cities witnessed such trend was in May 2012. 

He added, “Consumers should get reasonable prices all over country.”

Currently, the Petrol, diesel, natural gas, crude oil and jet fuel (ATF) are not  included in the ‘one nation, one tax regime’ GST which is in effect since July 2017. 

When excise duty was cut in October 2017, the finance ministry asked states to reduce their VAT, however only four states have followed the same. Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh -- reduced rates while others including NDA-ruled states ignored the call.

The Rs 2 per litre excise duty cut, cost the government Rs 13,000 crore in the remaining part of FY18, while about Rs 26,000 crore in annual revenue, as per finance ministry. 

From VAT, government earned income of Rs 1,66,378 crore in last fiscal (FY17) compared to the income of Rs 1,29,045 crore in FY14. Income from excise duty touched a whopping Rs 2,42,961 crore in FY17 as against mere income of Rs 77,982 crore in FY14. 

CLSA earlier said, “There has been some re-jigging of the excise classification (infra/road cess and basic excise) for petrol and diesel but effectively the overall excise burden is unchanged.”

“FY19 budgeted excise collections from auto fuels seem to build in no cut in excise duties during the year despite high crude prices. This may keep the suspense alive on whether the gov’t will cut duties to offset any further rise in crude prices,” CLSA added.

At present, as per IOC data, taxes account for 52.73% in final petrol prices, while remaining 42.27% was derived from global crude oil. In case of diesel, crude oil accounted for 57.73%, while taxes 47.53% in final retail prices.

Thus, till the time, international crude oil continues to rise, and Indian government shying in cutting excise duty, consumers will suffer in regards to their purchase of petrol and diesel.