Haryana, the northern state in India is one of the wealthiest states in the country. Agriculture, manufacturing sector, service industry and retail sector are the major drivers of state’s economy.
Haryana is also a major contributor to Indian economy with agriculture and manufacturing sector being the drivers of growth. Though the state is primarily an agricultural state, with the swift development of world-class infrastructure, it attracted both public and private investments and is one of the most developed states in India.
Comparing with the neighbouring Indian states, Haryana currently offers a litre of diesel for Rs. 59.64 as on 2 October 2017. The highest price is observed in the Telugu state of Andhra Pradesh at Rs. 66.11/Lt, while the lowest is being offered by the state of Mizoram at Rs. 56.63 per litre.
Factors Affecting Diesel Rate in Haryana
Diesel pricing is composed of various elements some of which are fluctuating in nature, resulting in varying diesel prices every day.
The primary component that decides diesel price in Haryana or elsewhere in the country, is the international crude oil price. India being one of the biggest importers of crude oil, purchases crude oil from other countries. The price at which the oil companies buy a barrel of oil from international companies forms the major component of diesel pricing. The higher the price of a barrel of oil, which is equivalent to 159 litres of oil, in the international market, the higher the retail selling price of diesel in India.
State Taxes and Diesel Price in Haryana
As discussed earlier, state and central government taxes form a major chunk in the diesel price. While the central government levies excise duty on diesel, the state government charges value added tax (VAT).
Currently, the Haryana government charges 16.4% VAT per liter of diesel. After adding cess and surcharge on the VAT, the effective tax rate on diesel comes to 17.22%, which is 13.6 points less than the highest tax levied by the Andhra Pradesh government and 5.22 points more than the lowest VAT levied by the Mizoram government.
Effect of GST on Diesel Price in Haryana
GST or the goods and services tax, which was introduced in India in July 2017, replaces multiple taxes levied by state and central government at various levels in India. Currently, GST is being levied in four different tax brackets including 0%, 5%, 12%, 18% and 28%.
While the implementation of GST impacted the prices of most of the commodities in India both positively and negatively, its effect on prices of diesel and other petroleum products, for now is, zero.