Diesel Price in Ranchi Today

How do oil companies arrive at the final selling price of diesel? What are the factors which impact the diesel price in Ranchi to change? When do oil companies revise the diesel rate? Let's understand and review these questions in detail to understand the concept behind diesel pricing in India.

How do Oil-Companies Arrive at the Final Selling Price of Diesel in Ranchi?

Diesel Price in Ranchi = Global Crude Oil Price + Currency Exchange Rate + Taxes + Profit Margin & Dealer Commission

As mentioned, diesel is purchased in its crude form from oil-producing countries. Therefore, the crude oil price is the primary component of the diesel price. Oil companies purchase crude oil in the global market at the current trading rate. Crude oil rates differ due to seasonal fluctuations, shortage in supply, geopolitical tensions or higher demand from emerging economies in the world. A revision in the global crude oil price changes the diesel price in Ranchi as well as other cities in India.

Trading of crude oil in the international market typically happens in US dollars. The exchange rate of the US dollar is essential while purchasing crude oil in the market. An instance of the US dollar appreciating over the Indian rupee increases the cost to purchase crude oil and when the dollar weakens over the rupee, the price to pay for crude oil decreases.

Tax on diesel in India is levied by both the Centre and the respective State. Currently, the Centre imposes excise duty of Rs.15.33 for a litre of diesel, while the state of Jharkhand charges Value Added Tax (VAT) at 23.33% per litre. The tax on the supply of diesel is the biggest component of diesel pricing.

Oil companies purchase crude oil which is then refined as diesel and transported to fuel stations across the country. Fuel companies add their profit margin, other operational costs and dealer (fuel station owners) commission before arriving at the retail selling price of diesel in Ranchi.

Why do Diesel Prices Change Daily?

Diesel prices are revised under the 'Dynamic Fuel Pricing' mechanism. Fuel companies include the preceding day's crude oil rate and the US dollar exchange rate to the Retail Selling Price (RSP) of diesel. Diesel prices are updated daily at 6 a.m. IST which is automatically updated in automated fuel stations, while it's manually updated at non-automated petrol pumps.

Prior to the daily revision in diesel prices in India, prices were revised every fortnight. Oil companies included the average rate of the preceding fortnight's crude oil and the currency exchange rate to the diesel cost.

However, under this method oil companies and consumers weren't able to pass on any benefits to the customer immediately. This is because, if there's a sudden increase in the crude oil price, oil companies had to wait a fortnight to pass on the increase to the customer, this led to losses incurred. Also, if the crude oil rate declined, customers were unable to take advantage of the drop in diesel prices. Therefore, the fortnightly method was stopped and the dynamic fuel pricing mechanism was introduced.

How to Check the Current Diesel Price in Ranchi?

Since diesel prices are revised on a daily basis, oil companies have launched several methods to track the fuel price.

1. SmartPhone Apps: With extensive use of smartphones, oil companies have launched their respective mobile apps to track the latest diesel price in a city such as Ranchi. Indian Oil has introduced the 'Fuel@IOC' app, Hindustan Petroleum has launched the My HPCL' app, while Bharat Petroleum customers can track it via their 'SmartDrive' app.
2. SMS Services: Customers looking to take advantage of the SMS service need to send as per the format below.
   1. Bharat Petroleum: SMS RSPDealer Code to 9223112222.
   2. Indian Oil: SMS RSPDealer Code to 9224992249.
   3. Hindustan Petroleum: SMS HPPRICEDealer Code to 9222201122.
3. Website: Consumers can also visit the respective oil company's website to check the current diesel price in Ranchi.

Computation of the Diesel Price in Ranchi

To understand the concept of dynamic fuel pricing mechanism and the components which results in the final selling price of diesel better, the table below is the breakup of the diesel price recorded in Ranchi on 3 June 2018.

Diesel Vs. Petrol Price in Ranchi

Diesel prices are cheaper compared to the petrol price in Ranchi. This is due to the taxes imposed and the operational costs involved in refining the crude oil to diesel. While the Centre's excise duty on petrol is Rs.19.48 a litre, diesel attracts Rs.15.33 per litre. As for the VAT levied by Ranchi, petrol is charged at 27.45%, while diesel is levied at 23.33% for a litre.

Is GST Applicable on Diesel in Ranchi?

India moved to a unified tax regime known as the Goods and Service Tax (GST). Petroleum products such as diesel and petrol; however, does not come under the framework of the GST. The Centre and the states continue to levy the excise duty and the VAT respectively. With the current tax, the government earns higher revenue compared to the highest tax slab under the GST. Currently, GST is not applicable on diesel in Ranchi.

If diesel is brought under the ambit of the GST, the cost to purchase a litre of diesel will considerably reduce.

*Disclaimer: BankBazaar makes no guarantee or warranty on the accuracy of the data provided on this page, the prevailing prices are susceptible to change and provided on an as-is basis. We accept no liability for any loss arising from the use of the data contained on this website.