When you fill your tank in Delhi, over half your petrol bill vanishes into government coffers—not the oil companies.
Analyst Sujay U broke down the math on LinkedIn, revealing that the true cost of petrol—factoring in crude, refining, and dealer margins—is just ₹45 per litre. Yet consumers are paying upwards of ₹100. The ₹55 difference? Mostly tax.
According to Sujay, petroleum taxation funneled a staggering ₹7.5 lakh crore into central and state government accounts in FY 2023-24. That figure rivals the combined GDP of Sri Lanka and Bhutan. In Delhi alone, taxes account for roughly 55–56% of the pump price.
“The government wins. You lose,” he wrote bluntly, noting that oil prices have dipped in recent months, but consumer costs haven’t budged. Instead, tax rates climbed. On April 7, 2025, the Centre raised excise duty by ₹2 per litre—without a visible increase at the pump. Oil companies absorbed the hike, keeping prices stable but profits lean.
Despite public focus on oil companies, Sujay emphasized that “they’re earning far less than the government.” Central government collects 60% of its oil sector revenue from taxes, while states derive a staggering 90% from the same.
“You’re not just fueling your car,” Sujay wrote. “You’re fueling India’s biggest money-minting machine.”
As petrol prices hover high even when global oil drops, the tax burden on Indian drivers remains one of the heaviest worldwide.
