The revenue collected by the Centre and the state governments through taxes on petroleum products is mind boggling.

While the Centre collected over Rs 93,800 crore in taxes and duties from state-run oil companies in 2006-07, the state governments got Rs 62,121 crore, of which Rs 56,115 crore came through sales tax alone.

An analysis of the break up of price components of two major auto fuels—petrol and diesel—will show how the consumers are being squeezed.

Take the example of petrol. Currently retail selling price of petrol (in Delhi) is Rs 43.52 per litre. The basic price is only Rs20.20. But the customs duty at 3 per cent, excise duty at  6 pc plus Rs 13 per litre plus 3 pc education cess constitute 34 per cent of the retail price. Sales tax is levied at 17 per cent of the retail price. Thus the total of all taxes and duties on petrol constitute 54 pc of the retail price.

Similarly, the basic price of diesel (in Delhi) stands at Rs 20.82. Customs duty at 5 pc, excise duty  at 6 pc plus Rs 3.25 per litre plus 3 pc education cess account for 32 pc of the retail price, which is now fixed at Rs 30.48 per litre.

But in the case of LPG—popularly known as domestic gas—and kerosene distributed under the PDS the share of
duties and taxes stands at just 4 pc of the retail prices (in Delhi). While the Centre has totally exempted both the LPG and kerosene from excise and customs duty, most of the state governments levy sales tax ranging from 4 to 12.5 pc.

As far as domestic LPG is concerned, all the states impose a sales tax of 4 per cent.   

But most of the state governments try to mobilise as much resources as possible by imposing very high level of sales tax on petrol and diesel. It varies from18 pc to 33 pc on petrol. While Manipur imposes the lowest level of sales tax on petrol at 18.09 pc, Andhra Pradesh slaps a sales tax of 33 pc. Karnataka levies a sales tax of 28 per cent on petrol.

Same is the scenario in case of diesel. While Punjab imposes the lowest level of sales tax on diesel at 8.23 pc, Maharashtra puts the highest level of 28 pc on the fuel. Karnataka levies a sales tax of 20 pc on diesel.

As part of the exercise to ease off burden on consumers, the Centre has been requesting the state governments to bring down the level of sales tax on auto fuels. But very few states have heeded the advice as they do not want to sacrifice the lucrative revenue.  Nor does the Centre, of course!