Diesel Price in Gujarat
Diesel price in Gujarat, the westernmost state in India, has seen an upward trend until the recent tax cuts by the central and state governments respectively in October 2017. Following the central government’s request to reduce state-level taxes on diesel and petrol, Gujarat is the first state to bring down the value-added tax on both diesel and petrol.
Factors Affecting Diesel Rate in Gujarat
To understand the various factors that affect diesel price in the state, one needs to understand various components involved in diesel pricing.
The price of diesel, unlike most of the other commodities, does not just include the product price but various other components that add up to the retail selling price of diesel.
The state-specific factor that would affect diesel price in Gujarat is the value-added tax (VAT) levied by the state government.
VAT charged on diesel is different for different states. Hence the diesel price in Gujarat primarily varies from other states due to the tax charged by the state government.
Other factors that affect diesel price in Gujarat similar to other Indian states are the international crude oil price, the US dollar to rupee exchange rate, and the central government tax.
State Taxes and Diesel Price in Gujarat
As detailed earlier, state-specific taxes make diesel price in Gujarat different from that of other states. Currently, the Gujarat government levies 25% VAT on diesel effective from 10 October 2017.
The state recently revised its tax rate following the central government’s request to reduce the state-level taxes on petrol and diesel. Prior to the revision, VAT on diesel in Gujarat was 28.96%.
