Why Petrol is very expensive in India?

                      We all get this question - Why the petrol rate in India is very high?
Many other countries sell petrol at a lower price.

Here are the petrol rates in our neighboring nations:

• Pakistan      Rs 35.97

• Bangladesh  Rs 29.43

• Sri Lanka     Rs 21.02

• Nepal          Rs 39.24  

• India          Rs 65.17

                      These nations do not produce petrol on their own. They rely on the Gulf  as we do. In-spite of this, they sell petrol at a lesser rate.

Image by Mahesh http://mycanon123.blogspot.com/

                      The Indian Government says that the rise of price in international market has led to the rise of price in India. Currently, the price of one barrel is $88. One barrel is equal to 160 liters. So, if we assume that the price of one barrel is $100, one liter of petrol would come for Rs. 28.

We add various taxes in this way:

Original price              Rs 25.40  -->  Base Price

Excise duty                  Rs 16.28  (Tax on the sale, or production for sale, of specific goods)

Educational tax           Rs 0.90   (It will used by Central Government for Education in India.)

Crude oil custom duty Rs 2.10   (For Importing crude oil )

Petrol customs duty     Rs 2.24 

VAT                             Rs 8.86   (Petrol is a 'Value Adding Product' )

Dealer Commission     Rs 1.75

Transportation Cost    Rs 7.64

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Total                            Rs 65.17
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Reason for levying such a huge amount of tax:

                     In India, only 2% of the population pays Income Tax. It means that, remaining 98% population is either lower middle class or lower class / Below poverty Line (BPL) . The government needs to to support Social Security, health care, national defense and social service activities. So, we are left with no other option other than imposing tax on petrol.Our neighboring countries have different method of taxation and hence they impose heavy taxes on some other commodities.

                      I personally feel that... similar to the way we have a white card for below poverty line population, the Income Tax payers must get a black-card and such people must be exempted from any of the above taxes.

                      Though this idea sounds to be a pleasing one, it is highly impossible. Suppose,a family has four members with four vehicles - and only one person pays the Income Tax to the government. He will use his black card to refill all his four vehicles. If he is more intelligent, he will open a black market and sell it to others. This will be totally unacceptable to the government.

                       Anyway, am glad that, even those people who try to prove that they belong to BPL criteria are contributing to the national revenue indirectly. Also, higher the price, lesser would be the consumption and hence lesser would be the pollution.