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The Central government collects less taxes on petrol than the local state governments.

The tax levied by the Central government on petrol is more compared to that of the taxes collected by the states and Union Territories.

The tax levied by the Central government on petrol is more compared to that of the taxes collected by the states and Union Territories.A post claiming state governments are charging almost double the tax on petrol than the central government is being widely shared on social media. This claim is false.

Financial Express has analyzed the petrol prices in Delhi, which is as follows: The base price (price to the dealer) comprises 36% of the retail petrol rates in Delhi, while state VAT makes up 23% and central taxes account for 37% of the final fuel price paid by the end-user. The petrol pricing differs from one state to another mainly due to the difference in VAT price collected from the state governments. As per the tariff document uploaded on the PPAC website, the Central government levies a tariff of ₹32.90 per liter of petrol as of 03 February 2021.

In percentage terms, some states charge sales tax which goes as high as 36%. The highest VAT is imposed by Rajasthan, which levies 36%, while other states like Karnataka, Telangana impose 35% of VAT. But the VAT percentage is calculated after adding all the elements of the price.

For example, the price build-up by BPCL as of 01 February 2021 shows that the price of petrol per liter in Delhi is Rs. 86.31. Of the retail selling price, the price charged to dealers by BPCL is ₹ 29.72, and the Commission paid to the dealers is Rs. 3.69. The Central Excise Duty, which forms the major component, amounts to Rs. 32.98, and the state levies a VAT of 30%, which is Rs.19.92.

Thus it is evident that the Central government gets a larger share of tax in the form of excise duty and cess on petrol than the amount that reaches the state exchequer.

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