Goa CM Manohar Parrikar on Monday proposed an 11% reduction in VAT (value added tax) on petrol in the state's budget. The fuel costs Rs 65.61 a litre in Panjim. After the reduction takes effect on April 2, the price will come down to about Rs 55 a litre.
Central and state taxes make up nearly half of petrol's pump price. The Centre levies a specific excise duty of Rs 14.35 a litre and 3% education cess to mop up Rs 14.78 out of Rs 65.64 a litre that consumers pay for a litre of petrol in Delhi.
The Delhi government makes Rs 10.94 by charging VAT at 20%. The state's take also includes VAT on dealer margin of Rs 1.49 per litre. The government's earning stood at Rs 7.99 on a litre when petrol cost at Rs 47.93 a litre in June 2010, when the fuel was decontrolled.
The Central and the state governments pocket Rs 25.72 from sale of each litre of petrol in Delhi. State-run fuel retailers actually sell the fuel to dealers at Rs 38.42 a litre. This, one could say, is the price of the product after paying for refining, transporting and other sundry costs as well as giving allowance for loss from evaporation.
State governments levy VAT on petrol ranging from 15% in Puducherry to 33% in Andhra Pradesh, making it a major source of income.
Finance minister Pranab Mukherjee said as much in Parliament on Tuesday. "Price without tax - I am taking Delhi city - per litre of petrol price would be Rs 39, diesel would be Rs 33.51, kerosene would be Rs 14.12. For kerosene, there is hardly any tax. The Central government does not have any tax. Some states have some tax, that is 4.8%; but Centre has no tax. If the excise duty, customs duty and state VAT taken together, it comes to Rs 26.55," he said while replying in the debate on the Finance Bill.
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