Tax-on-tax on petrol, diesel earns states Rs 1.2 trillion in two years

It could be one critical reason why the road to fuels under GST bumpy

When you buy a litre of petrol, the value-added tax (VAT) levied by your state gets applied on the price inclusive of Union excise duty, and in the case of Delhi, you end up paying Rs 5.3 per litre as a state tax on a central tax. Though the amount is different across states, the situation is not.  

Due to this double taxation, Indian consumers paid about Rs 1.2 trillion as VAT on excise duty — as a tax on another tax — on retail consumption of petrol and diesel in the two years (2016-17 and 2017-18), shows