Today's Diesel Price in Punjab

Find the current Diesel price in Punjab and factors affecting petrol prices in India. The below Diesel price trend in Punjab offers insights such as the highest and lowest Diesel prices recorded during a month.

Diesel Price in Punjab Compared to its Neighbouring States

Compared to the neighbouring states of Himachal Pradesh, Jammu and Kashmir, Haryana and Rajasthan, diesel price in Punjab is relatively low. Except for Rajasthan, diesel price in all other states is almost similar as the state-level taxes levied by the respective governments vary marginally.

Factors Affecting Diesel Rate in Punjab

Diesel price in Punjab is different from that of other states mainly due to the state-specific tax involved. All the states in India levy value added tax (VAT) on diesel and other petroleum products. Whenever there is a revision in the tax, the diesel price in the respective states will get affected and so in Punjab.

Besides VAT, other factors that commonly affect the price of diesel in Punjab and in all other Indian states are the global crude oil price, US dollar to Indian rupee exchange rate, central government taxes, profit margins and other operating costs.

Diesel price in India is directly linked to the international crude oil price as India imports more than 70% of its oil requirements from other countries.

Change in the exchange rate impacts the diesel price as global oil trading typically happens in US dollars. A weak dollar brings the price of diesel down, whereas a weak rupee makes it costlier.

Just like the state governments levy VAT, the central government charges excise duty on diesel, which remains same across states. Any revision is the tax would directly impact the price of diesel across all Indian states. Recently, the government reduced the excise duty on diesel by Rs.2/Lt bringing down the diesel prices across the nation by Rs.2/Lt.

Other factors that would marginally impact the diesel price are the dealer's commission and other operating costs. Dealer's commission is currently being revised once in a year by the oil marketing companies. Whenever it is revised diesel prices will get affected.

State Taxes and Diesel Price in Punjab

As mentioned earlier, the state government of Punjab levies VAT on diesel. Currently it collects 17.33% VAT on a litre of diesel, which is lowest compared to the tax charged by its neighbouring states.

Rajasthan, for instance, charges the highest VAT on diesel among the aforementioned states at 25.74% per litre of diesel.

It is the state level tax that makes the price of diesel lower in Punjab compared to its bordering states.

How often Diesel Rates are Revised in Punjab

Diesel prices in Punjab, just like in other Indian states, are being revised on a daily basis as per the dynamic fuel pricing model introduced in India in June 2017.

The new pricing model mandates daily revision of diesel prices in line with the international crude oil prices and the currency exchange rate.

Prior to dynamic fuel pricing, diesel prices in India were revised once in 15 days, which used to give sudden price shocks to the customers.

With the new daily revision of diesel prices, any change in the global crude oil price and the exchange rate would be immediately transferred to the end customer. It also brings transparency in fuel pricing in India.

As per the new pricing model, all the petrol pumps should update the revised diesel price by 6 a.m every day. The oil companies will update the same to the petrol pump dealers by 8 p.m. the previous day.

While the automated fuel stations will get an auto update of revised fuel prices, the non-automated stations have to update the price manually.

Customers can find the daily revised diesel prices on the websites of the oil companies. For petrol pump specific diesel prices, they have to send an SMS with dealer code, which will be available at the respective fuel stations.

Effect of GST on Punjab Diesel Price

GST or the goods and services tax has been introduced in India with a tag line, 'one nation, one tax', which is self-explanatory. Following the implementation of GST, uniform tax is being observed on various products and services across India. However, diesel and other petroleum products still do not follow an uniform tax structure as they are kept outside the purview of GST.

Yes, diesel is not being taxed under GST but as per the old tax regime, where state and central governments levy separate taxes on the commodity. Hence, the effect of GST on the price of diesel is currently nil.

As bringing diesel and other petroleum products under GST regime is the most sought after reform across India, let us see what would happen to the price of diesel in Punjab if it is brought under GST.

Currently GST is being levied in four different tax brackets, the highest being 28%. Assuming diesel to be taxed under the highest tax rate, the total tax on a litre of diesel will be 28%.

The state of Punjab currently charges 17.34% VAT on a litre of diesel, while the central government is levying excise tax of Rs. 15.33/Lt, which is almost 26% on the current diesel price in Punjab. Together, the current taxes on diesel come to 43.34%, which are way higher than the highest tax bracket under GST. Therefore, bringing diesel under GST is more likely to bring its price by Rs. 13-14 per litre in Punjab.

Diesel Cost versus Petrol Costs in Punjab

As of 12 October 2017, a litre of diesel costs Rs.57.11 in Punjab, and petrol costs Rs.73.42/Lt. The price difference between the two commodities exceeds Rs.16 per litre, which is a matter to ponder on as both the fuels are extracted from the same crude.

Same crude, almost similar refining, same means of transportation, sold at same fuel station, but the price is different. What could be the culprit that is making petrol price higher than that of diesel The simple answer is the tax. Yes, the tax all again. Apparently, for every problem related to fuel pricing in India, tax seems to be the main trouble maker. Let us see how.

While the VAT in Punjab is 17.34% on a litre of diesel, it is 36.11% on petrol. Similarly, the central excise duty on diesel is Rs.15.33/Lt and on petrol it is Rs.19.48/Lt. After knowing the tax rates, isn't it quite obvious why petrol is priced higher than diesel.

Especially in Punjab, the price difference between petrol and diesel is high because of the high tax difference.

*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.