Petrol, Diesel Cost Most in Andhra Pradesh Due to High VAT, Least In Andaman
The state VAT structure drives sharp fuel price differences, with Andhra Pradesh highest and Andaman & Nicobar lowest nationwide.
Petrol and diesel prices across India continue to show significant regional variations, with Andhra Pradesh recording the highest rates due to elevated state Value Added Tax (VAT), while the Andaman & Nicobar Islands offer the lowest, as highlighted in a parliamentary response on Monday. In Amaravati, the capital of Andhra Pradesh, a litre of petrol costs Rs 109.74 and diesel Rs 97.57, compared to Rs 82.46 for petrol and Rs 78.05 for diesel in the Andaman & Nicobar Islands.
The disparity arises primarily from state-imposed VAT, with Andhra Pradesh levying the highest at Rs 29.06 per litre on petrol and Rs 21.56 on diesel, atop the central excise duty of Rs 21.90 per litre for petrol. In contrast, the Union Territory applies a minimal VAT of just Rs 0.82 on petrol and Rs 0.77 on diesel, resulting in substantially lower pump prices for consumers.
Minister of State for Petroleum and Natural Gas Suresh Gopi explained in a written Rajya Sabha reply that final retail prices incorporate central excise duty, state VAT or local levies, dealer commissions, and freight charges. Other high-price states include Kerala (petrol at Rs 107.48 per litre in Thiruvananthapuram) and Telangana (Rs 107.46 in Hyderabad), while more affordable rates prevail in Union Territories like Chandigarh (Rs 94.30) and Goa (Rs 96.43 in Panaji).
Diesel follows a similar pattern, with elevated costs in southern states and lower rates in BJP-ruled regions like Bihar and Odisha (Rs 91-93 range), alongside the cheapest in Andaman & Nicobar. Smaller states and UTs benefit from reduced taxation burdens, reflecting fiscal priorities and lower revenue needs compared to larger states.
Fuel pricing in India has operated on a daily dynamic basis since 2017, tracking international crude oil benchmarks and exchange rates. Central interventions, including excise duty reductions in 2021-2022 and an Rs 2 per litre cut by oil companies in 2024, have provided relief, though state VAT remains the key driver of differences.
Ongoing discussions about including petroleum under GST aim for uniformity but face resistance from states over potential revenue losses. For now, consumers in high-VAT states like Andhra Pradesh bear higher costs, while those in low-tax areas enjoy relief amid stable global oil markets.
