Petrol Price in Chennai Today

Among all industry verticals, the manufacturing and car segments are gaining more importance. The transportation sector is in demand. Namakkal district is the transportation hub of the city. The district accounts for at least 40% of trucks operated throughout Tamil Nadu. Sankagiri, well-known for truck body constructing, is another notable region of Chennai.

Diesel-run vehicles are widely used, leading to an increase in the diesel consumption rate. The number of petrol-run vehicles in the town is as much as it can be in a metro city.

How are Petrol Prices in Chennai Assessed?

The cost of crude oil, the refinery cost, the dealer's commission, the profit margin of OMCs, the state VAT imposed on petrol, and the excise duty levied on petrol are the major components to form the retail selling price (RSP) of petrol in Chennai. Crude oil is traded globally in the USD. The cost oil is influenced by global supplies and reserves, the demand from leading countries, seasonal variations, weather conditions, and the exchange rate of the USD against the major currencies.

Refinery expenses vary domestically. These are the expenses incurred by oil marketing companies to convert unrefined oil into petrol. OMCs then add a certain percentage of profit margin on every litre of petrol sold to retail petrol suppliers. The price charged to retail petrol suppliers is then taxed by the central and state governments.

The central excise duty remains the same in the price structure of petrol in all parts of the country, including Chennai. The state VAT varies from one state to another. As on 1st January 2019, the VAT imposed on petrol by the state government of Tamil Nadu is 34%.

The dealer's commission is another element that may slightly change from dealer to dealer in Chennai and other cities of India. It depends upon the distance covered from supply stations to retail petrol stations. The higher the distance covered, the higher will be the dealer's commission. The lower the distance covered, the lower will be the dealer's commission.

Which are the Factors Influencing Petrol Price in Chennai?

Every petrol consumer somebody like you in Chennai would want to know why the cost of petrol changes over a period time. Let's begin the central excise duty. As discussed earlier, it was recently revised on 4th October 2018. Since the duty has been cut by Rs.2.50 on petrol per litre, prices have now been lower compared to those before the revision.

Another important factor that influences the buying cost of petrol in the city is the cost of raw oil, which is aligned to the currency exchange rate and the global supplies and reserves. If crude oil is in short supply globally, the buying cost of oil will increase. If the supply of oil is at par with global requirements, then the buying cost of oil will be moderate.

Being a base currency, the performance of the USD is measured against the currencies of major economies such as Australia, the United Kingdom (UK), Japan, and New Zealand. When the INR is falling against the USD, crude oil prices will increase respectively; when the INR strengthens against the USD, prices will fall accordingly.

Political events in oil-producing countries can cause changes in oil prices, which in turn impact petrol prices in Chennai. How about the local tax imposed on petrol? In fact, this is also a major influencer. All these elements directly impact the cost price of petrol in Chennai.

Influence of GST on Petrol Price in Chennai:

What is the highest GST rate fixed till date? It is undeniably 28%. Besides petroleum products, petrol does not fall under the purview of GST, which stands for Goods and Services Tax. All tax elements in the current price breakup of petrol price should be eliminated if GST is to be imposed.

The retail selling price (RSP) of petrol will fall by a big margin even if GST is enforced at its highest rate, i.e., 28%. The move harms the revenue source of the Tamil Nadu government and the central. Bringing petrol under the scope of GST is at the discretion of the central government.

How about the oil and natural gas industry? The entire oil and natural gas industry has been kept outside the scope of GST. The industry has many participants, right from OMCs to petrol bunk owners. The GST implementation on the industry is likely to impact its participants adversely.

For instance, industry stakeholders are required to adhere to double tax regimes, causing increased compliance costs. The GST council may consider increasing the tax rate to ensure petrol is brought under the GST regime and the revenue source of the state and the central remains unaffected.

Petrol Costs in Chennai

As we all know, on 4th October 2018, the central government lowered the excise duty by Rs.2.50 per litre on petrol and diesel, giving a big relief to consumers. Following the revision, petrol was priced at Rs.84.76 a litre in Chennai and diesel at Rs.77.16 on 5 October, declining by Rs.2.63 and Rs.2.68 per litre, respectively. The move overburdens the government by Rs.26,000 crore in yearly revenues and Rs.13,000 crore during the residual portion of the present financial year.

Petrol Price in Chennai and Other Major Cities:

The petrol price in Chennai is marginally higher compared to other major metro cities such as Delhi, Mumbai, Kolkata and Hyderabad as the local Value Added Tax (VAT) levied by the Tamil Nadu government is higher. As of 2018, Tamil Nadu charges 34% on petrol, while Delhi charges 27%, West Bengal at 25%, Maharashtra at 26% + Rs.7.12 per litre as additional tax and Andhra Pradesh levies 31% + Rs.2 per litre additional tax.

Diesel Costs vs. Petrol Costs in Chennai:

Diesel prices are much lower than petrol prices in India. Despite the basic cost of diesel after refining is higher than that of petrol, the taxes such as the excise duty and the local sales tax or VAT, makes diesel much cheaper than petrol.

*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.