Government looting the people by taxing petrol and diesel

When the Narendra Modi led NDA Government took power in May 2014, the international price of crude oil was over $105 per barrel, but by December 2014 the prices crashed to nearly half, US $ 60 per barrel.  However, petrol and diesel prices were not accordingly reduced in India. Today also the price of crude oil is at US $ 60 per barrel but the prices Indian people pay for petrol and diesel are at the same level as they were in May 2014!

For denying the benefit of low crude oil price to the Indian people, the Central Government firstly increased the taxes on petrol and diesel. Secondly after GST was introduced for all manufactured commodities, it refused to bring petrol and diesel under GST and kept on increasing the taxes on these two products.

As can be seen from Table 1 below, the total tax collected on these two items in 2018-2019 was nearly

Table 1: Taxes and duties collected from sale of petrol and diesel and other petroleum products in India and their appropriation by Central and State Governments during the last 5 years

2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Total Taxes and Duties Collected (Rs. Crores)






Share of the CentralGovernment (Rs. Crores)






Share ofthe State Governments (Rs. Crores)






Rs 6 lakh crores. The total tax collected as GST from all other goods produced and sold in India during 2018-2019 was Rs 11.77 lakh crores. Hence tax collected on just petrol and diesel is more than 50 per cent of total tax collected through GST from all other goods and services!

It is to be noted that all the public sector oil companies are making huge profits and this is also adding to the revenues earned by the Central Government from petrol and diesel (See Table 2).

Table 2: Profits (in Rs. Crores) made by different Oil PSU’s (after Tax)

2014-2015 2015-2016 2016-2017 2017-2018 2018-2019


















Currently the Central Government levies a huge tax on petrol and diesel. Whenever the international price of oil falls it further increases the tax on these products. For example, when oil prices fell from US $ 69 in April 2018 to US $ 60 in July 2019, special additional excise duty of Rs. 1 per litre and Infrastructure cess of Rs 1 per litre on petrol and diesel were added in the budget presented on 5th July 2019!

State governments also levy huge tax on petrol and diesel. As a result, total tax on petrol and diesel is as high as 105 per cent and 67 per cent respectively as compared to the maximum GST rate of 1 per cent on mass consumption goods (See Table 3).

Table 3: Huge Taxation on petrol and diesel (Rs. per litre)

Basic Price

 Excise Duty

State VAT

Dealers Commission

Retail Price

Effective Tax Rate, %















In spite of the huge earnings of the central government from looting the Indian people through exorbitant taxes on petrol and diesel, the Government always claims that it has no money for spending on sectors which would improve the lives of the working people of the country. Instead of increasing spending on public health and education, the government is promoting private hospitals and private schools and colleges.

At the same time, the central government has all the resources to keep on giving hand outs to both Indian and foreign monopoly capitalists.  Soon after burdening the working people by increasing the price of petrol and diesel by Rs 2 in the July 2019 budget, the corporate tax was reduced in September from 30 per cent to 22 per cent and even from 25 per cent to 15 per cent for new manufacturers!  Similarly, the taxes collected from the working people are used to recapitalise the public sector banks which have been looted by the capitalists who refuse to pay back the loans taken from these banks. The non-performing assets of banks (Loans which the capitalists are refusing to pay back) are over Rs. 10 lakh crores.  The public sector banks have already written off over Rs 4 lakh crores of bad loans! The Central Government uses the money looted from the people to recapitalise these banks!

The working class and toiling peasantry of India produce all the material wealth and services of India. Yet, it is they who are continuously taxed and looted to further fill the pockets of a miniscule minority of monopoly corporate capitalists who control and dictate the policies of this government.


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