Cross a state border and the price of petrol can change noticeably. The fuel is the same. What changes is mainly tax and the cost of getting the fuel to that pump.
What goes into the pump price
The retail price is built up in layers:
- Base price. The oil company's cost for refined fuel, which follows international crude prices and the rupee-dollar exchange rate.
- Freight. The cost of moving fuel from depots to the pump.
- Central excise duty. Charged by the central government, and the same across the country.
- Dealer commission. What the petrol pump owner earns per litre.
- State VAT. Charged by each state government, and different in each state.
The central tax applies equally everywhere, so the differences between cities come mostly from the state VAT, with transport costs adding smaller differences.
Why two cities in one state can differ
Within a state, the VAT rate is usually the same, yet prices can still differ by small amounts. Distance from the nearest depot is the usual reason. Some states or cities also apply a local cess or surcharge.
When prices change
Since June 2017, Indian oil companies have been able to revise petrol and diesel prices daily, with new prices taking effect at 6 am. In practice, prices can stay unchanged for long stretches, then move after a change in tax or an oil company decision. The date beside a price matters as much as the number.
Do different companies charge different prices?
Indian Oil, Bharat Petroleum and Hindustan Petroleum usually price very close to each other in a given city. A small difference between pumps from different brands is normal. Private retailers may set their own prices.
How to spend less on fuel
- Check your mileage honestly. Fill the tank, note the odometer, drive, fill again, and divide the distance by the litres used.
- Keep tyres at the right pressure. Under-inflated tyres raise fuel use.
- Fill up before crossing into a higher-VAT state on a long trip, if it is convenient and safe.
Use our trip fuel cost calculator to plan a journey, and see the latest listed rates on the petrol price and diesel price pages.