If you have ever filled up near a state border, you know the puzzle: the same petrol can cost roughly Rs 82 a litre in Andaman and Nicobar and more than Rs 109 in Andhra Pradesh as of March 2026. Here is why fuel prices differ across India.

**The build-up.** Retail price starts with base fuel cost — crude, freight, refining and the oil companies’ marketing margins. Indian Oil, Bharat Petroleum and Hindustan Petroleum control about 90% of retail sales and revise prices daily at 6 am under the dynamic pricing system introduced in 2017. Then taxes pile on: central excise duty, dealer commission and state VAT.

**The state gap.** Central excise is uniform, but state VAT is not — and that is the story. States set their own VAT rates on fuel, one of their most dependable revenue sources, ranging from about 17% in Goa to 39% in Maharashtra. Freight charges also vary with distance from refineries, adding small regional differences.

**Why no GST fix?** Bringing petrol under GST would make prices more uniform, but states would lose a major revenue lever — so the current structure stays, and the pump price keeps depending on where you fill up.