Confusion prevails over reduced petrol price in Kerala

Representational Image. Reuters.

Kochi: Petrol and diesel prices in Kerala have come down after the Central Government announced a reduction in excise duty on Saturday. However, there is an anomaly regarding petrol, which now costs Rs 9.48 less, instead of the expected Rs 10.41. In other words, customers are paying 93 paise more than the actual price. Meanwhile, the price of diesel has come down as suggested.

Before the excise duty was cut on Saturday, petrol was priced at Rs 115.20 in Kochi. On Sunday, the price was Rs 105.72.

Soon after the Centre’s announcement, the Finance Department in Kerala said in a press release that the state would proportionately reduce Rs 2.41 for petrol and Rs 1.36 for diesel. However, the petrol price came down only by Rs 1.48 in addition to the Rs 8 cut implemented by the Centre.

At the same time, diesel now sells for Rs 7.36 less than before the reduction. This is Rs 1.36 over the cut of Rs 6 announced by the Centre.

Kerala imposes a Value-Added Tax (VAT) of 30.08 per cent on petrol and 22.76 per cent on diesel. As a result, it has to reduce Rs 2.41 for petrol and Rs 1.36 for diesel when the Centre announces a cut of Rs 8 and 6 respectively on the two fuels.

Apart from Kerala, similar discrepancies regarding petrol prices have been reported from states such as Tamil Nadu and Maharashtra.

Minister’s stand

In his response to queries regarding the petrol price, Kerala’s Finance Minister K N Balagopal said that the state had reduced Rs 2.41 for petrol and Rs 1.36 for diesel.

“Kerala has not simply reduced the taxes proportionately. It is a real cut by the state,” he said.

“When the Centre reduced Rs 10 for diesel and Rs 5 for petrol on November 4 last year, prices in Kerala came down by Rs 12.30 for diesel and Rs 6.56 for petrol,” the Minister pointed out.

He also said that duty on petrol was increased 13 times during the term of the UDF ministry led by Ommen Chandy. “The LDF has not raised the tax. In fact, a reduction of Re one was implemented in 2018,” said Balagopal.

The following is the breakup of prices at IOC outlets in Kochi on May 22:


Basic price: Rs 57.33 

Excise duty: Rs 19.90 

Dealer Commission: Rs 3.78 

State taxes: Rs 24.36 

Total price: Rs 105.37 


Basic price: Rs 58.14 

Excise duty: Rs 15.80 

Dealer commission: Rs 2.57 

State taxes: Rs 17.59 

Total price: Rs 94.10. 

No loss for states: Centre      

Meanwhile, Finance Minister of India Nirmala Sitharaman said that states will not suffer revenue loss following the cut in fuel prices as the Government of India had reduced only the Road and Infrastructure Cess (RIC), which is a part of the Central excise duty. Sitharaman tweeted that income from RIC is not passed on to the state.

“The Central taxes include basic excise duty, special excise duty, RIC and agricultural-infrastructure development cess. Of these components, only basic excise duty is shared with states,” she said.

“As basic duty – which is shared with states – has not been reduced, their revenue will not be affected,” the Union Minister explained.

“The cut in November 2021 was also in RIC,” she added.

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