This article is from Jul 05, 2021

Is Tamil Nadu government responsible for the raise in petrol VAT? Is it taxed at Rs 40 per liter ?


Tamil Nadu government raises VAT on petrol and diesel. Central Government gives 1 liter of petrol to the Government of Tamil Nadu for Rs. 59.94 but DMK government sells it for Rs.100

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Now, petrol is being sold for more than 100 rupees in most of the states including TamilNadu .Across India, the Modi-led government has been facing strong protests on social media over rising petrol, diesel and gas prices. Meanwhile, a social media post with the template of India Today’s news article and another image is circulating in social media, which claims that the Central Government offers petrol to Government of Tamil Nadu as meagre as Rs 59.94 . Yet DMK government sells it for Rs.100 within the state.

What is the reality?

No announcement has been made that the DMK-led Tamil Nadu government has increased VAT on petrol and diesel after taking charge. The Finance Minister of Tamil Nadu has admitted that there is no possibility of reducing the petrol and diesel tax at present situation . Debates arise as DMK government has so far not reduced the petrol price.

India Today’s report titled, “The Tamil Nadu government increases VAT on fuel : Petrol price up by Rs.3.25 per litre, diesel by Rs.2.50” was published on May 3, 2020 when the previous ADMK led government had increased the VAT on fuels. This news card has been circulating now in such a way to impose that DMK government has increased the price.

Did Tamil Nadu government hike a tax of Rs 40 on petrol?

According to the official website of Indian Oil Corporation Limited, as on July 1, 2021, the base price of a liter of petrol is Rs 39.29, its excise duty is Rs.32.90, dealer commission is Rs.3.82 and state VAT is Rs.22.80, for a total of Rs 98.81.

As on July 1, the base price of petrol with added excise duty and dealer commission the state government receives per liter of petrol at Rs. 76.01 from the Union government. Right now Petrol price in Chennai is Rs.100.13 . Based on this, the Tamil Nadu VAT on a liter of petrol is Rs.24.12 which is less than the Union government’s excise duty of Rs.32.90.

Diesel prices on July 1, 2021 can be found in the table above. In Chennai, a liter of diesel costs Rs 93.72. Of this, base price, excise duty, dealer commission adds up to Rs.76.14 per liter and state’s VAT is Rs 17.58.

The Government of Tamil Nadu levies 15% + Rs.13 VAT on a liter of petrol and 11% + Rs. 9.62 VAT on a liter of diesel, according to the official website of the Government of India’s Petroleum Planning & Analysis cell (PPAC).

Internationally the price of crude oil rises as the dollar rises which leads to the rise in base prices of the fuel and ultimately, the price will increase for public utilization. Similarly, even if excise duty and VAT expands, prices will boom.

Conclusion :

In our search, we came to know that the information claiming that DMK Government has increased the VAT on petrol and diesel and that tGovernment of Tamil Nadu is levying VAT of Rs. 40 per liter of petrol is misleading.

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