How Petrol & Diesel Prices Are Set in India (2026)

India's petrol and diesel pump prices combine an OMC retail rate, central duties, state taxes, dealer compensation and freight. The system permits daily price changes at 6:00 AM, but rates can stay unchanged for long periods. This guide explains the current mechanism and the important March 2026 excise-duty change.

India fuel pricing: the quick answer

A petrol or diesel pump price is broadly made up of:

the OMC product price and freight to the supplying depot or market;
central excise duties and cesses;
dealer commission;
state or union-territory VAT, sales tax and any additional cess.

Those components do not all use a single fixed per-litre amount. State formulas can combine percentages, minimum amounts and cesses, while dealer commission includes a fixed component plus a percentage linked to the product billable price.

How daily price revision works

Indian Oil says daily petrol and diesel price changes are effective from 6:00 AM. The nationwide system began on 16 June 2017, replacing the earlier fortnightly cycle. The mechanism gives OMCs a daily window to publish a new retail selling price; it does not require the number to change every morning.

You can check the latest imported rates on our India petrol price tracker and India diesel price tracker. Each city page shows the date attached to its source price.

The March 2026 excise-duty change

On 27 March 2026, the Government of India announced an immediate ₹10-per-litre reduction in excise duty on both petrol and diesel. The official announcement also said retail pump prices would remain unchanged: the reduction was intended to offset part of the under-recovery being absorbed by public-sector OMCs, rather than create a ₹10 pump-price cut for motorists.

This is why old breakdowns quoting the pre-change excise amounts are no longer reliable. For the current components, use PPAC's central excise schedule. For the policy change itself, see the Ministry of Petroleum and Natural Gas announcement.

What each pump-price component means

OMC product price and freight

The starting commercial amount reflects the fuel product, refining and supply economics, and transport to the relevant depot or market. International product prices and the rupee–dollar exchange rate can influence this component, although movements are not always passed straight through to retail prices.

Central excise duties and cesses

The central schedule contains several duty and cess components. Because these can change through government notifications, a single hard-coded total quickly becomes stale. PPAC's current tariff table is the appropriate reference for the live schedule.

Dealer commission

Dealer compensation is not one universal fixed amount per litre. PPAC's latest schedule describes a fixed rupees-per-kilolitre component plus a percentage of the OMC's product billable price, with separate petrol and diesel formulas. See the official dealer commission schedule.

State VAT, sales tax and cesses

Petrol and diesel remain outside GST, so every state or union territory can use its own tax formula. Some apply a percentage, some specify a minimum rupees-per-litre amount, and some add road, infrastructure, pollution or other cesses. PPAC maintains the current state VAT, sales-tax and cess table.

How to read an official price build-up

PPAC links to current OMC price-build-up reports. A build-up normally separates the amount charged to the dealer, central duties, dealer commission, state tax and the final retail selling price. Use a report dated for the same market and period as the pump price you are comparing; combining values from different dates can produce a false total.

Start with PPAC's official petrol and diesel price-build-up directory.

Why rates differ between states and cities

State tax is the clearest source of large regional differences. Two states can apply different percentages, minimum per-litre floors and cesses to similar pre-tax fuel costs. Within one state, smaller differences can arise from freight, the supplying depot, local levies where applicable and OMC pricing.

That makes city-specific data more useful than a national headline. For example, compare the latest dated rates for Delhi, Mumbai and Ranchi rather than assuming one India-wide pump price.

Our India data source and limitations

Cheapest Fuel Finder currently imports aggregated city-level petrol and diesel data from GoodReturns.in daily. Direct OMC websites are not consistently accessible to our automated systems, so our India feed is not a direct official OMC API. We show the price date supplied with each record and identify district-derived prices where applicable.

Use the tracker for comparison and trend discovery, then confirm the final displayed price at the filling station before buying. A newer OMC revision can occur after our daily import.

Frequently asked questions

Who sets petrol and diesel prices in India?

Oil marketing companies publish retail selling prices. The final pump rate also reflects central excise duties and cesses, each state or union territory’s VAT or sales-tax formula and cesses, dealer commission, and freight.

When can fuel prices change in India?

India’s daily price-revision system has applied nationwide since 16 June 2017, with changes effective from 6:00 AM. A daily revision window does not mean the price must move every day; the published rate can remain unchanged.

What changed with fuel excise duty in March 2026?

On 27 March 2026, the Government of India announced a ₹10-per-litre reduction in excise duty on both petrol and diesel. The government said retail pump prices would remain unchanged because the reduction would offset part of the losses being absorbed by public-sector OMCs.

Why do petrol and diesel prices vary by state?

Petrol and diesel remain subject to state VAT or sales tax rather than GST. States use different percentages, minimum per-litre amounts and cesses, so the tax applied to otherwise similar fuel can differ materially by location.

Why can fuel prices differ between cities in the same state?

Freight from the supplying depot, local cesses where applicable, and OMC product pricing can create small city-level differences even when the main state tax formula is the same.

Where does Cheapest Fuel Finder get India prices?

Cheapest Fuel Finder imports aggregated city-level market data from GoodReturns.in daily because direct OMC sites are not consistently accessible to our automated systems. Each city page displays the source price date. Drivers should confirm the final price shown at the pump before purchase.