Both the auto fuels i.e. diesel and petrol are now closer in price with a gap of just single digit in comparison to Rs. 30 gap seven years ago. The gradual increase in the retail price of diesel to levels close to the price of petrol is being attributed to both the oil marketer's dynamic pricing model being followed since mid-June last year and higher VAT or sales tax being levied on the commodity by state governments and Union Territories (UTs).
Also, diesel is now selling at a higher rate in comparison to petrol at some of the places including Goa, Gujarat, Odisha and Andaman and Nicobar Islands. In Goa, price of diesel is Rs. 2 more than petrol while in Gujarat, Odisha and Port Blair it is priced higher by Rs. 1.
The tax structure in Goa on both the fuels is moderate i.e. 12.86% in case of petrol while 15.03% for diesel. Consequently, diesel is priced more than petrol by Rs. 2 in the state.
Also, in the state of Gujarat, in two cities namely Surat and Ahmedabad, you end up paying higher on diesel when compared to petrol due to higher tax on diesel at 22.28% versus 22.19% on petrol.
In Odisha too, the cost for diesel comes to be higher by Rs. 1.2 than petrol due to higher tax levy by the state on diesel of 25.08% as against 24.63% on petrol.
When talking about Andaman and Nicobar islands which charges the least VAT on auto fuels across India of just 6% on both the fuels, cost for diesel is higher than petrol by some 14 paise.
Also, as a deterrent to the automobile industry, climbing diesel prices have resulted in lower sales of diesel cars.