Diesel Price/Rate in Bangalore Today

Fuel prices used to be revised every two weeks or 15 days. Now, diesel prices in Bangalore are revised daily based on the 'Dynamic Fuel Pricing' mechanism. It's essential to check the diesel price in Bangalore as any decrease in cost could save you some money.

State-owned Oil Marketing Companies (OMCs) such as Bharat Petroleum, Indian Oil and Hindustan Petroleum fix the new diesel price in Bangalore in tandem with any changes in crude oil prices in the international market.

What is Dynamic Fuel Pricing?

Diesel fuel price fluctuations are attributed to the daily revision of fuel prices in the country under the 'Dynamic Fuel Pricing' method. Oil companies consider the fortnight average of crude oil price along with the rupee-dollar exchange rate to fix the retail selling price of diesel or petrol. The new diesel price in Bangalore is effective from 6:00 am IST.

By keeping fuel prices in India proportional to the global crude oil price, oil companies can offset any losses as well as pass on any benefits to the consumer. Before this mechanism, oil companies revised fuel prices every fortnight, this was before 16 June 2017, when the daily revision was introduced in the country.

Under the previous method, oil companies used to revise fuel prices every fortnight or 15 days. This led to a sudden incline or decline in fuel prices, sometimes leading to a sudden leap in prices. To avoid burdening the consumer, the daily revision of fuel prices was introduced, with small changes to diesel rates every day.

Factors Affecting Diesel Prices in Bangalore

Diesel rates in Bangalore are made up of several important components apart from the oil price and the rupee-dollar exchange value. After the refining process, components such as entry tax, freight charges, refinery charges, oil firm's margin and logistics are levied before arriving at the basic cost of fuel. Petrol pump owner's commission, excise duty levied by the Centre and the respective state's local tax or VAT are later added to the basic cost of fuel.

While most of these components' charged are not dynamic, the global crude oil price and the rupee-dollar exchange rate are dynamic. Hence, these two factors are the primary reason why diesel prices fluctuate in India. Let's review the factors which affect crude oil prices in the international market.

1. Supply and Demand of Crude Oil: he Organisation of Petroleum Exporting Countries (OPEC) along with their strong allies have been the biggest suppliers of crude oil in the global market, thereby influencing oil prices to a large extent. Policies by the OPEC are mainly driven by geopolitical developments. So, any pressure on any one of the OPEC members often leads to a reduction of oil supply and oil prices incline accordingly. Likewise, if there's an increased supply of oil, prices often drop.
2. Geopolitical Tensions: Political events and crisis lead to a rise in crude oil prices. Conflicts in any of the oil-producing region could potentially lock up supplies, thereby increasing the oil rates. Any crisis such as natural disasters or any political upheaval affects the oil price as well.
3. Future Supply of Crude Oil: The biggest oil-producing and oil-consuming countries reserve large quantities of crude oil to keep their economy healthy in the event of an oil price increase. These countries usually stock up when the prices are lower, and the supply is spread through the economy to keep prices steady.

Diesel Price Calculation in Bangalore

Here's how the diesel price is calculated before it's retailed in the country by State-run oil firms. Below is the price breakup of diesel price in Bangalore recorded on 3 January 2019.

Diesel Price in Bangalore Compared to other Metro Cities

Diesel prices are different from city to city and between fuel station to fuel station. This is because of taxes levied by the respective state. In Karnataka, the state government levies 21% as VAT on the sale of diesel in the state, while it charges 32% on petrol. Other metro cities such as Mumbai, diesel attracts 24%, in Kolkata its 17% or Rs.7.70 per litre, and in Chennai, it's 25%.

Diesel Price Vs. Petrol Price in Bangalore

The basic cost of both petrol and diesel are the same, however, other charges lower the diesel price. The excise duty levied by the Centre and the VAT charged by the respective State is much lower than levied on petrol, making the diesel price in Bangalore lower than petrol prices.

Is GST Applicable in Diesel?

India moved to a new tax regime known as the Goods and Service Tax (GST) which became effective from midnight of 1 July 2017. Under this tax regime, all goods and service were brought under one tax structure. However, five petroleum products such as petrol, diesel, crude oil, natural gas and aviation turbine fuel (ATF) were exempted from attracting the GST.

Currently, both petrol and diesel continue to attract the excise duty levied by the Centre and the VAT charged by the respective State. The tax incidence of excise duty and VAT is around 45-50% on petrol and 35-40% on diesel. The highest tax rate under GST is 28%, which means, both the Centre and states will lose huge revenue. While the Centre could lose up to Rs.20,000 crore, the states want to keep their revenue pool to meet any contingency.

Additionally, GST is an ad valorem levy, which is charged as a percentage on the ex-factory rate. This would lead to a massive impact on retail rates whenever refinery gate prices are raised due to an incline in crude oil prices in the international market and the reverse could also be true.

Also check : Today's Gold Price in Bangalore

*Disclaimer: BankBazaar makes no guarantee or warranty on the accuracy of the data provided on this page, the prevailing prices are susceptible to change and provided on an as-is basis. We accept no liability for any loss arising from the use of the data contained on this website.