Today's Diesel Price in Tamil Nadu

Diesel Price in Tamil Nadu Compared to other South Indian States

Diesel price in Tamil Nadu compared to other south Indian states such as Andhra Pradesh, Telangana, Karnataka, and Kerala is the second lowest, with a litre of diesel trading at Rs.92.48/Lt on 14 May 2026. The lowest price is offered in Karnataka, which maintains comparatively lower state taxes on diesel, leading to reduced fuel prices in the state. The second lowest diesel rate in Tamil Nadu can be attributed to the tax rate charged by the state government, which compared to other south Indian states is again the second lowest, with VAT and other state levies contributing around 18%–21% of the retail diesel price.

How are Diesel Prices Calculated in Tamil Nadu?

The retail price of diesel in Tamil Nadu is determined by a combination of factors. The final price you pay at the pump includes the cost of crude oil, central and state government taxes, and dealer commission.

Here's a breakdown of the key components:

• Crude Oil Price: This is the base price of crude oil, which is sourced from international markets. It is the biggest component of the final fuel price.

• Central Government Taxes: The central government levies excise duty on diesel. This is a fixed amount and does not change with the price of crude oil.

• State Government Taxes: Each state government imposes a Value Added Tax (VAT) on diesel. This is a percentage of the price of diesel, including the cost of crude oil and excise duty.

• Dealer Commission: Oil marketing companies pay a commission to the fuel pump owners. This commission is also included in the final retail price.

Factors Influencing Diesel Rates in Tamil Nadu

Several factors can influence the price of diesel in Tamil Nadu. These include:

• Global Crude Oil Prices: The price of diesel is directly linked to the price of crude oil in the international market. Any fluctuation in global prices affects the retail price of diesel in India.

• Value of the US Dollar: Crude oil is traded in US dollars. Any change in the exchange rate between the Indian Rupee and the US Dollar will impact the cost of importing crude oil and, consequently, the price of diesel.

• Government Taxes: Both central and state government taxes play a significant role in determining the final price of diesel.

• Demand and Supply: The demand and supply of diesel in the domestic market also affect the price. Higher demand can lead to higher prices, and vice-versa. 

Dynamic Fuel Pricing

India follows a dynamic fuel pricing system, where the prices of petrol and diesel are revised daily. This system was introduced in 2017 to ensure that the changes in international oil prices are passed on to the consumers.

Under this system, the oil marketing companies in India, such as Indian Oil, Bharat Petroleum, and Hindustan Petroleum, review the price of petrol and diesel every morning at 6 a.m. The prices are adjusted based on the average price of crude oil in the international market and the INR-USD exchange rate over the previous 15 days.

Advantages of Dynamic Fuel Pricing

The dynamic fuel pricing system has several advantages:

• Better Inventory Management: Daily price revisions help oil marketing companies and dealers to manage their inventory better.

• Reduced Price Volatility: The daily revision of prices helps in reducing the sudden spikes in fuel prices.

• Passing on Benefits: Consumers can benefit from a fall in international crude oil prices, as the prices are revised daily.

• Transparency: The daily revision of prices ensures transparency in the pricing mechanism.

State Taxes and Diesel Price in Tamil Nadu

The Tamil Nadu government currently levies value added tax (VAT) of 28% on a litre of diesel, which compared to other south Indian states is the second lowest, with the lowest levied by the Karnataka government. The latest tax revision in the state took place in April 2025, when the government increased the tax from 24.5% to the current 28%. VAT on petrol was increased from 31% to 36%. With the revised tax rate, diesel in the state became costlier by Rs.2.40/Lt and petrol by Rs.4.95/Lt in the same month.

Diesel Costs versus Petrol Costs in Tamil Nadu

The average price difference between petrol and diesel in Tamil Nadu is about Rs.12-14/Lt. The difference in price is mainly due to the difference in the VAT being levied on both the commodities. Currently, the central excise duty on diesel is Rs. 18.80/Lt, whereas on petrol it is Rs. 22.50/Lt. Similarly, the VAT charged by the Tamil Nadu government on diesel is 28%, while it is 36% on petrol.

*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.