Today's Diesel Price in Gujarat

Would that higher consumption and demand lead to higher diesel prices in the state? Read further to find the answer. You may also get to know about the factors affecting the diesel price in Gujarat, impact of GST on diesel price and about the daily revision of diesel prices in detail.

Factors Affecting Diesel Rate in Gujarat

To understand the various factors that affect diesel price in the state, one needs to understand various components involved in diesel pricing.

The price of diesel, unlike most of the other commodities, does not just include the product price but various other components that add up to the retail selling price of diesel.

The primary elements of diesel pricing include the C&F (cost and freight) price, which is nothing but the rate at which Indian oil companies purchase crude oil from the foreign companies, central and state government taxes, transportation charges, operating costs and margin. Any change in the aforementioned elements would bring variation in the diesel price.

The state specific factor that would affect diesel price in Gujarat is the value added tax (VAT) levied by the state government.

VAT charged on diesel is different for different states. Hence the diesel price in Gujarat primarily varies from other states due to the tax charged by the state government.

Other factors that affect diesel price in Gujarat similar to other Indian states are the international crude oil price, the US dollar to rupee exchange rate, and the central government tax.

India is a major importer of crude oil purchasing about 75% of its oil requirements from other oil producing nations. Price of crude oil is volatile in nature as it is based on various factors such as the demand and supply in the international markets, political stability in the oil producing nations, climatic conditions and others. Therefore any change in the crude oil price will directly affect the price of diesel in India.

The exchange rate is another factor that impacts the diesel price as oil trading typically happens in dollars. The strengthening dollar is always a threat for the oil prices in India.

Other factors that marginally impact diesel pricing in India are the profit margins of dealers and OMCs, transportation and other operation charges. As these factors do not vary on a day to day basis, their impact on the diesel price on a daily basis is negligible.

State Taxes and Diesel Price in Gujarat

As detailed earlier, state specific taxes make diesel price in Gujarat different from that of other states. Currently the Gujarat government levies 25% VAT on diesel effective from 10 October 2017.

The state recently revised its tax rate following the central government's request to reduce the state-level taxes on petrol and diesel. Prior to the revision, VAT on diesel in Gujarat was 28.96%.

Following the VAT cut diesel price in Gujarat came down by Rs. 2.72 per litre.

How often Diesel Prices are Revised in Gujarat?

Unlike the previous fortnightly revision, diesel prices in Gujarat, just like in rest of the India, are being revised on a daily basis.

The new pricing system, also called dynamic fuel pricing, was introduced in June 2017, to bring transparency in fuel pricing and also to align the fuel prices in India to that in international markets. Any change in the global oil prices thus immediately impact the end customer on a daily basis.

As per the new pricing system, all the petrol pumps in the state will update the revised diesel price every day by 6 a.m. While the automated petrol pumps that are controlled centrally get an auto update of diesel price, the non-automated pumps have to do it manually.

Customers can fetch the daily revised diesel prices from the oil company websites and also from the company's mobile apps, which are compatible on both android and iOS platforms.

For petrol pump specific prices they have to send an SMS along with the dealer code, which is available at the respective petrol pumps, to a specific number as allotted by the oil companies.

Effect of GST on Gujarat Diesel Costs

GST or the goods and services tax is the new tax regime introduced in India since July 2017. Following the implementation of GST, the prices of various goods and services have been impacted both positively and negatively, while few have been completed exempted from tax.

Coming to diesel and other petroleum products, many have been apprehensive about the impact of GST on diesel and petrol prices as more than 50% of their prices are composed of taxes.

Well, to everyone's surprise both diesel and petrol were kept outside the purview of GST. They are still being taxes as per the old tax regime, where state and central governments collect separate taxes on both the commodities.

Hence the effect of GST on diesel for now is nil. If diesel is brought under GST, its price may come down or go up based on the amount of tax that will be charged. We can expect a price cut only when the new GST is less than the current total tax on diesel.

Diesel Rate versus Petrol Rate in Gujarat

Diesel price in Gujarat, similar to other Indian states, is lesser than petrol prices because of the difference in the taxes being levied on both the commodities. However, compared to other states the price difference between petrol and diesel in Gujarat is relatively less as the state government charges same amount of VAT on both diesel and petrol. It currently charges 25% VAT on both the fuels.

The major factor that contributes to the price difference between petrol and diesel is the central excise tax which is currently at Rs. 19.48 on a litre of petrol and Rs. 15.33 on a litre of diesel. Other factors that bring marginal difference are the dealer's commission, OMCs profit margin and other charges.