Today's Diesel Price in Hyderabad

Petrol and diesel prices will be revised daily by considering the 14-day average price of crude oil and the rupee-dollar exchange rate. New fuel prices are effective from 6:00 am IST. State-owned Oil Marketing Companies (OMCs) such as Indian Oil, Bharat Petroleum and Hindustan Petroleum revise and fix the final selling price of diesel and petrol.

Hyderabad is one of the fastest growing cities in India with an increasing number of people migrating to the city. Diesel consumption in Hyderabad has increased in recent years due to an increase in population. Public transport and private vehicles use diesel extensively to travel across the city, making the fuel an essential commodity.

Dynamic Fuel Pricing Meaning:

Why do diesel prices fluctuate in India? Fuel prices are currently revised according to the international crude oil price along with the exchange rate of the rupee over the U.S. dollar. With the daily revision in diesel prices, oil companies can offset any losses as well as pass on any benefits to the consumer.

The move to revise fuel prices daily in India was aimed at passing on the benefit of even the smallest change to consumers and dealers. As mentioned, prices used to be revised every fortnight, however, this led to a sudden spike or decline in fuel prices, burdening consumers.

The 'Dynamic Fuel Pricing' mechanism helps both oil companies as well as consumers from any sudden leaps in prices that need to be brought into effect at the end of a fortnight.

Factors Affecting the Diesel Price in Hyderabad:

While the global crude oil price and the rupee-dollar exchange rate are the biggest component of the diesel price in Hyderabad, there are several other components which form the calculation of the diesel price in Hyderabad as well. Freight charges, entry tax, refinery charges, oil firms' margin and logistics are charged before the basic cost of diesel is fixed. Apart from these, taxes such as excise duty levied by the Centre and the local sales tax or VAT is charged by the respective state government. 

That said, crude oil prices in the international markets and the rupee-dollar exchange rate are dynamic in nature, impacting the price we pay for a litre of diesel in India. Let's understand why crude oil prices fluctuate in detail.

1. Supply and Demand for Crude Oil:While the demand for crude oil is usually steady in the international market, the supply fluctuates due to several reasons. The Organisation of Petroleum Exporting Countries (OPEC) is the biggest supplier of crude oil in the market, thereby influencing oil rates. OPEC's policies are impacted by any geopolitical developments, therefore, any pressure on any one of the OPEC members leads to a shortage in supply of crude oil, rising crude oil prices and vice versa.
2. Geopolitical Tensions:Crude oil prices are often affected by geopolitical tensions such as political events and crisis. War, natural disasters and political upheaval leads to a shortage in supply, leading to an incline in oil prices. Also, conflicts between any oil-producing or oil-consuming countries could potentially decline the supply of oil in the market, which influences crude to trade higher.
3. Future Supply and Reserve:Crude oil is reserved by the biggest oil-producing or oil-consuming countries to keep their economies healthy in the event of an oil price increase. These countries stock up oil when prices are low and then spread across the economy to keep prices steady.

Diesel Price in Hyderabad Compared to other Metro Cities:

The VAT on diesel is comparatively higher than other major metro cities of the country. While diesel attracts 27% VAT on the sale of diesel in Hyderabad, other major metro cities such as Delhi levies 16.75%, Mumbai charges 24%, Chennai levies 25% and in Bangalore, it's 21%.

Diesel Price Vs. Petrol Price in Hyderabad

The basic cost of crude oil is the same for both petrol and diesel, however, taxes on diesel are much lower than petrol. In Hyderabad, petrol attracts VAT of 35.20%, while diesel attracts 27%, making the later cheaper.

Why Diesel is not under GST?

India moved to a new taxation regime known as the Goods and Service Tax (GST) from 16 July 2017 for all transactions of goods and services. However, five petroleum products such as crude oil, petrol and diesel, natural gas and aviation turbine fuel (ATF) were kept out of the ambit of GST. Both the Centre and states were not in favour of GST being implemented on the sale of petrol and diesel. This is because, the Centre would lose more than Rs.20,000 crore as input tax credit through excise duty, while states want to keep their revenue pool intact to meet any contingencies.

The total tax incidence of excise duty and VAT is around 45-50% on petrol and 35-40% on diesel but the total tax incidence under the GST is 28%, affecting the revenue generated by the Centre as well as the respective State. Additionally, GST is charged as a percentage on the ex-factory price which could have a massive impact on retail prices whenever refinery gate prices are increased on the back of a rise in crude oil prices in the international market and vice versa as well.

That said, if diesel is brought under the ambit of GST, the retail price of diesel will reduce drastically and consumers will be the biggest beneficiary.

*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.