Fact Check: Do State Governments Get Benefitted The Most From Rising Petrol Prices? Here Is The Truth

A post is viral on social media that insinuates that the hike in petrol prices benefits the State governments far more than the Central government.

The post reads: “All the Petrol Pump should have board like this: Basic Rate 35.50 Central Govt Tax 19.50 State Govt Tax 41.55 Distributor 6.50 ————————————— Total. 103.05 Then public will understand who is responsible whether state Govt. or Central Govt.”

The link to the post can be seen here. Similar posts can be seen here, here, here, here and here.


NewsMobile did a fact-check and found the viral claim to be misleading.

On searching with the keywords, ‘tax distribution between state and centre on petrol’ we found an article published by India Today on February 22, 2021.

The article mentioned that nearly two-thirds of the taxes that we pay for purchasing petrol goes to the Centre and states. The report said, ‘On average, state governments collect Rs 20 on every litre of petrol, compared to the Centre’s levy of Rs 33 per litre.’

Observer Research Foundation (ORF) wrote an article attributing data of Indian Oil Corporation and Petroleum ministry’s planning and analysis cell (PPAC).

The report said that Madhya Pradesh (MP) observed the highest petrol price (Excluding Union Territory) on July 12, 2021, at INR 104.01 per litre and Andhra Pradesh (AP) saw the lowest price at INR 88 per litre.

The difference in petrol price between them was due to the state levied value-added tax or VAT. The VAT in Madhya Pradesh was Rs 31.3 per litre or 31 per cent of the retail price, while in Andhra Pradesh it was Rs 16.8 per litre or 18 per cent of the retail prices.

The report further read, ‘Central (excise) and state taxes constituted 61 per cent of the retail price of petrol in Madhya Pradesh and 55 percent of the retail price of petrol in Andhra Pradesh while central tax alone accounted for 31 percent of the retail price in Madhya Pradesh and 36 percent of the retail price in Andhra Pradesh.’

On further searching, we found a document mentioning the price build-up of petrol in Delhi at retail pump outlets of Bharat Petroleum Corporation Limited (BPCL) on July 16, 2021. As per the document, the cost of crude oil was Rs 41.39 per litre. Excise duty levied upon it was Rs 32.90 per litre, Dealer’s Commission was Rs 3.85  per litre and VAT levied is Rs 23.44 per litre.

Data mentioned on the website of PPAC says that VAT levied on petrol changes varies from state to state. The lowest VAT is in Arunachal Pradesh at 6% and the highest VAT is in Madhya Pradesh at 33%.

Hence, we can evidently conclude that the viral claim is misleading.

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