High excise duties on petroleum products, among other factors, have led to their burgeoning retail prices lately. The levy of such duties has also contributed to a high proportion of gross tax revenues for both the Centre and State governments.
Motoring ahead
Consumption of diesel and petrol in India has zoomed in recent years, allowing taxation on petroleum products to become a major source of revenue.
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Tax accrual
Since November 2014, excise duties on fuel have been increased 12 times by the Central government. This has reflected in soaring revenues for the Centre and States.
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States of VAT
Maharashtra, Madhya Pradesh and Andhra Pradesh have the highest VAT on petrol. In the case of diesel, Andhra Pradesh, Telangana and Chhattisgarh levy the highest VAT. The data is as of September 1, 2018.
An indirect tax reliance
Excise duties on petro-products (EP) have increased substantially as a component of gross tax revenues (GTR) in the last three years. This has corresponded with drops in the share of corporate taxes as opposed to a slight increase in the share from income taxes.
| Financial Year | Excise Duties on Petro-Products as % of Gross Tax revenues | Corporate Tax as % of GTR | Income Tax as % of GTR |
| 2009-10 | 10.2 | 39.2 | 19.6 |
| 2010-11 | 9.7 | 37.7 | 17.5 |
| 2011-12 | 8.4 | 36.3 | 18.5 |
| 2012-13 | 8.1 | 34.4 | 19 |
| 2013-14 | 7.7 | 34.7 | 20.9 |
| 2014-15 | 8.6 | 34.5 | 20.8 |
| 2015-16 | 13.7 | 31.1 | 19.8 |
| 2016-17 | 16.1 | 28.3 | 20.4 |
| 2017-18 | 11.8 | 29 | 22.6 |