Petrol in MP costlier than neighbouring states:Higher VAT, cess and fixed taxes driving fuel prices sharply above Uttar Pradesh levels

Rising crude oil prices in the international market have pushed up petrol and diesel rates across India, but consumers in Madhya Pradesh are facing a significantly heavier burden due to the state’s taxation structure. According to the state-wise fuel price list dated May 16, 2026, petrol in Madhya Pradesh is priced at Rs 109.71 per litre, making it the third costliest in the country after Andhra Pradesh and Telangana. Diesel in the state is selling at Rs 94.88 per litre, placing Madhya Pradesh among the top five most expensive states for diesel prices as well. Petrol nearly Rs 13 costlier than Uttar Pradesh In neighbouring Uttar Pradesh, petrol is priced at Rs 96.99 per litre and diesel at Rs 90.25 per litre. This means consumers in Madhya Pradesh are paying Rs 12.72 more per litre for petrol and Rs 4.63 more for diesel compared to Uttar Pradesh. According to data from the Petroleum Planning and Analysis Cell (PPAC), Madhya Pradesh imposes: For diesel, the state levies: Three-layer tax system making fuel costlier The VAT imposed on petrol in Madhya Pradesh is significantly higher than in states such as Uttar Pradesh and Gujarat. Although Rajasthan has a similar VAT structure, Madhya Pradesh additionally charges a fixed tax per litre and a separate cess, making fuel prices even higher. According to PPAC data, VAT in Madhya Pradesh is also levied on dealer commissions, meaning taxes are applied not only on the base fuel price but also on additional components. In simple terms, fuel in Madhya Pradesh is taxed through three separate mechanisms: This layered taxation structure is pushing final retail fuel prices higher than many neighbouring states. Experts say revenue is shifting to other states Fuel dealers say the price gap with neighbouring states is causing residents of border districts to purchase fuel outside Madhya Pradesh. Ajay Singh, President of the MP Dealers Association, said the state currently earns nearly Rs 11,000 crore annually from petrol and diesel taxes. However, fuel business worth Rs 4,000 to Rs 5,000 crore is allegedly shifting to neighbouring states because of lower prices there. He claimed that if fuel prices were reduced, much of that revenue could return to Madhya Pradesh, potentially increasing the state’s annual fuel-related earnings to nearly Rs 16,000 crore. State’s petroleum tax revenue up 124% in 10 years Government data from PPAC shows that Madhya Pradesh’s earnings from sales tax and VAT on petroleum products have risen sharply over the past decade. In 2014-15, the state earned Rs 6,831.8 crore from petroleum taxes. By 2024-25, this figure had increased to Rs 15,329.4 crore. This marks a rise of Rs 8,497.6 crore, or nearly 124%, over ten years. In the first nine months of the 2025-26 financial year alone, the state has already earned Rs 11,395.3 crore from petroleum taxes, averaging approximately Rs 1,266 crore per month.