Rise in VAT by AAP Govt in Delhi Increases Petrol & Diesel Prices

Petrol price in Delhi was hiked by 96 paise per litre and diesel by 53 paise on Tuesday.

Petrol and diesel prices fluctuate for the third time in January, 2016. (Photo: iStockphoto)

Petrol price in Delhi was hiked by 96 paise per litre and diesel price shot up by 53 paise, on Tuesday, after the state government raised VAT or local sales tax on the two fuels.

The Delhi government raised VAT on petrol from 25 per cent to 27 percent, resulting in a 96 paise per litre hike in retail pump rates on Monday night.

Similarly, the VAT on diesel was increased from 16.6 percent to 18 percent. A pollution cess of Rs 0.25 per litre is also levied on diesel.

Petrol will now cost Rs 59.99 per litre as against the previous price of Rs 59.03, while a litre of diesel will now cost Rs 44.71 as opposed to Rs 44.18.

This is the third fluctuation in fuel prices in 2016. Even though the excise duty on fuel was increased by 75 paise on petrol per litre and Rs 1.83 on diesel per litre, the overall price of petrol was cut by 32 paise a litre and diesel’s by 85 paise a litre, on Friday, applicable starting midnight, 15 January.

In the beginning of January, petrol price was cut by 63 paise per litre while diesel rate was lowered by Rs 1.06 per litre on the midnight of December 31.

Every fortnight, petrol and diesel rates are reviewed by state-owned fuel retainers such as Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation, based on the average import cost and the rupee-dollar exchange rates.

Petrol and diesel prices are de-regulated in India, which means that they are directly influenced by market rates. Hence, the movement of prices in the international oil market reflects in the price changes of fuel rates in India.