Petrol can cost Rs 10–15 more per litre in one state than a city just across the border. The central excise duty is identical everywhere — Rs 19.90 per litre — so the gap comes almost entirely from state VAT, which ranges from roughly 19% in Delhi to about 36% in Rajasthan. Here is the exact breakdown.
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The pump price has well-defined components, each set by a different authority. India imports about 85% of its crude, which OMCs (Indian Oil, HPCL, BPCL) refine and price. On top of the ex-refinery base price (roughly Rs 55–65/L in mid-2026) come freight charges, an OMC margin of about Rs 3–4/L, dealer commission of about Rs 3.85/L, the uniform central excise duty of Rs 19.90/L for petrol — and then the big variable, state VAT, ranging from about 19% to 36%. Some states add cesses on top.
Because petrol is excluded from GST, states retain full control over fuel taxation, with no cap or standardisation. Approximate mid-2026 positions:
State VAT rates change periodically, often in budget sessions — for the accurate current rate in your city, use the Fuel Price page, updated daily at 6 AM.
Take an identical ex-refinery base price for both cities. Central excise (Rs 19.90/L), OMC margin and dealer commission are all near-identical, so the pre-tax cost is roughly the same. Telangana then applies about 35.2% VAT while Delhi applies about 19.4% — a VAT difference worth roughly Rs 9–10/L, which explains almost the entire Rs 10–12/L retail gap between the two cities on any given day.
The standard proposal is to bring petrol under GST for a single national rate. But petroleum VAT is among the largest own-tax revenue sources for state governments, and states have consistently blocked inclusion in GST Council discussions. Until that changes, inter-state gaps will persist; central excise cuts can lower the overall level (as in May 2022 — see the petrol price history) but cannot close the gap between states. Crossing a border to fill up where fuel is cheaper is entirely legal, and common where the gap exceeds Rs 8–10/L. For the full pricing mechanics, read the Fuel Prices Guide.
Among large states, Gujarat and Delhi consistently have among the lowest petrol prices thanks to lower VAT rates. Some union territories, like Andaman and Nicobar, occasionally see lower prices due to freight subsidies.
Rajasthan and Telangana consistently top the charts among major states because of VAT rates around 35-36%. Prices in Jaipur and Hyderabad often run Rs 10-15/L above Delhi on the same day.
Delhi charges roughly 19.4% VAT on petrol while Maharashtra charges around 26%. That gap translates to approximately Rs 5-8/L cheaper petrol in Delhi, helped further by Delhi's proximity to the Mathura refinery, which keeps freight low.
It is under discussion but politically difficult. States are reluctant to surrender petroleum VAT, one of their largest own-revenue sources, and inclusion needs broad GST Council consensus. No timeline has been set.
Yes, completely legal. There is no restriction on buying fuel in any Indian state. It is common near the Delhi-UP and Delhi-Haryana borders where gaps can exceed Rs 8-12/L - just weigh the savings against the extra driving distance.