Pricing of petroleum products in India is a balance between international crude oil price and the domestic tax policies. The paper analyses the extent to which central excise duty and state value-added tax (VAT) affect retail petrol prices in India. Based on data from 2011 to 2025, the study concludes that indirect taxes make a substantial contribution to retail gasoline prices in the short and long term. Suggesting a high pass-through of the excise duty to consumers and exacerbating the volatility induced by the ad valorem structure of VAT. The results emphasize the fiscal significance of oil taxation and its macroeconomic effects with respect to inflation and price stability. The policy implications are centred on tax harmonization, transparency and stabilization mechanisms.
Singh et al. (2026) studied this question.