Petrol price in the national capital was hiked by Rs 1.67 a litre on Tuesday and diesel by a steep Rs 7.10 per litre after the Delhi government raised local sales tax or value-added tax (VAT) on the two fuels.
Petrol in Delhi now costs Rs 71.26 a litre as against Rs 69.59 previously, oil industry sources said.
Diesel price has been hiked to Rs 69.39 per litre from Rs 62.29.
This follows Delhi government's decision of increasing VAT on petrol and diesel to raise an additional over Rs 900 crore annually.
VAT on petrol was increased to 30 per cent from 27 per cent, previously. In the case of diesel, the tax has been almost doubled to 30 per cent from 16.75 per cent.
There has been no change in the rates of petrol and diesel in any other city besides Delhi. State-owned oil companies continue to keep petrol and diesel rates on hold in view of extreme volatility in benchmark international oil rates.
After the increase, diesel in Delhi is the costliest in all metros. It is also costlier than diesel available in adjoining Gurugram, Ghaziabad and Noida.
As compared to the new rate of Rs 69.39 per litre in Delhi, a litre of diesel comes for Rs 66.21 in Mumbai, Rs 65.62 in Kolkata and Rs 68.22 in Chennai.
In Gurugram (Haryana), diesel is priced at Rs 63.18 per litre and it comes for Rs 62.82 a litre in Ghaziabad and Rs 62.96 in Noida.
Industry sources said with consumption in India being highly price-sensitive, trucks and other inter-state transport vehicles are likely to opt to refuel in neighbouring states and not in Delhi.
However, petrol in Delhi continues to be cheaper than other metros - it comes for Rs 76.31 a litre in Mumbai, Rs 73.30 in Kolkata and Rs 75.54 in Chennai.
After the hike in Delhi, petrol has become almost comparable to rates prevalent in adjoining cities of Gurgaon (Rs 71.21 per litre), Ghaziabad (Rs 71.90) and Noida (Rs 72.03).
The move to hike VAT on petrol and diesel may have been prompted by a slump in revenue collections of the state after business and economic activity was hit by the outbreak of COVID-19 and the subsequent lockdown imposed to spread its curb.
Meanwhile, the Delhi government had on Monday night also decided to impose a 70 per cent 'Special Corona Fee' on liquor.
In a late-night notification, the Finance Department of the Delhi government said, "70 per cent of the maximum retail price (will be levied) on all categories of liquor sold through retail licensees for consumption..."
The central government too had raised excise duty on petrol and diesel by Rs 3 per litre each in March to raise an additional Rs 39,000 crore annually. This hike negated the benefit arising from international oil prices slumping to two-decade lows.
Last month, benchmark Brent crude oil dropped to as low as USD 18.10 per barrel - the lowest since 1999, as coronavirus wiped away demand, creating large surpluses around the globe.
Prices have since rebounded to around USD 28 a barrel.
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