Travellers moving between Indian states notice price differences and usually attribute them to local cost of living. The real mechanism is narrower and more legible than that: three categories of goods sit outside the national tax system by constitutional design, and those three account for most of what you observe.
Everything below is from the Constitution, the GST Council, the Petroleum Planning and Analysis Cell and the Ministry of Statistics.
The design decision that explains everything else
Article 366(12A) defines goods and services tax as "any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption". The exception is written into the definition itself.
The Seventh Schedule's State List then reserves the relevant powers to the states. Entry 8 covers "Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors". Entry 51 covers duties of excise on alcoholic liquors. Entry 54, as substituted by the 101st Amendment with effect from 16 September 2016, covers taxes on the sale of "petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption".
So when GST replaced most state sales taxes, three things were carved out and left with the states. Those three are where inter-state price gaps live.
What GST does not vary
The GST Council's 56th meeting, announced on 3 September 2025, replaced the previous four-tier structure with what it called a "Simple Tax": a merit rate of 5 percent, a standard rate of 18 percent, and a special de-merit rate of 40 percent, alongside Nil. The changes took effect on 22 September 2025 for services and for all goods except tobacco and pan masala, which continue at existing rates until compensation cess obligations are discharged.
Several of those changes matter to a visitor directly. Hotel accommodation at or below Rs 7,500 per unit per day moved from 12 percent with input tax credit to 5 percent without. Beauty and physical well-being services including gyms and salons moved from 18 percent to 5 percent without credit. Air transport other than economy moved the other way, from 12 to 18 percent. Casino admission and race club services moved to 40 percent.
None of that differs by state. Two identical hotel rooms in Mumbai and Delhi carry identical GST.
Where it does vary: fuel
Central excise on petrol comprises a basic duty of Rs 1.40 a litre, a special additional excise duty of Rs 3.00, an agriculture infrastructure and development cess of Rs 2.50, and a road and infrastructure cess of Rs 5.00 — Rs 11.90 in total. For diesel the four components total Rs 7.80. These are the same everywhere in India.
State tax is not. The published state rates run from 1 percent in the Andaman and Nicobar Islands to 35.20 percent in Telangana.
| State | Petrol | Diesel |
|---|---|---|
| Maharashtra | 25% VAT plus Rs 5.12/litre | 21% VAT |
| Delhi | 19.40% VAT | 16.75% VAT plus Rs 250/KL |
| Gujarat | 13.7% VAT plus 4% cess | 14.9% VAT plus 4% cess |
| Karnataka | 29.84% sales tax | 21.17% sales tax |
| Telangana | 35.20% VAT | 27% VAT |
The result is visible at the pump. On 16 September 2026 the retail selling price of petrol was Rs 111.21 in Mumbai, Rs 113.51 in Kolkata, Rs 107.77 in Chennai and Rs 102.12 in Delhi. Mumbai and Delhi differ by Rs 9.09 a litre on the same product on the same day, entirely because of state tax.
Where it varies most: alcohol
Maharashtra publishes its excise structure in full, and the multipliers are large enough to explain most of what a visitor sees on a bar list.
Indian-made foreign liquor with a manufacturing cost up to Rs 260 per bulk litre attracts excise at 450 percent of manufacturing cost or Rs 750 per proof litre, whichever is higher, with a maximum retail price formula of manufacturing cost times 6.5 plus 40 percent VAT. Above that cost threshold the duty is 300 percent. Mild beer under 5 percent alcohol by volume attracts 175 percent of manufacturing cost or Rs 42 per bulk litre, whichever is higher, with an MRP of manufacturing cost times 3.75 plus 40 percent VAT. Wine from grapes grown in the state is treated far more lightly, at Rs 10 per bulk litre from 1 January 2022 to 31 December 2026, with VAT at 20 percent rather than 40.
That wine concession is the one arbitrage the State List genuinely allows: Maharashtra wine is taxed at a fraction of the rate applied to spirits and beer, and the state is India's main wine-producing region.
How large the general price gap actually is
It is worth putting the fuel and alcohol gaps in proportion, because travellers often generalise from them.
The Ministry of Statistics publishes a Consumer Price Index by state on a 2024 equals 100 base. For August 2026, the combined index ran from 104.72 in Mizoram and 105.32 in Tripura at the low end to 110.30 in Telangana and 109.85 in Kerala at the high end. Maharashtra sat at 108.44, against an all-India figure of 108.74. National retail inflation was 4.82 percent.
A spread of 5.58 index points across the whole country is real but modest, and it says nothing about who owns the shelf brands. It does not begin to account for a Rs 9 difference on a litre of petrol, which is the point: general goods vary a little, carved-out goods vary a lot.
The Ministry itself cautions that state-level item indices should be interpreted and used with care, which is worth respecting before drawing conclusions from any single line of that data.
What this guide does not cover
The statutory basis for prohibition in Gujarat and Bihar is not stated. Both states' own excise and prohibition department sites were unreachable, and no Act could be retrieved, so only the constitutional power that permits prohibition is described here.
No CBIC notification number is given for the central excise rates. The rates above are published by the Petroleum Planning and Analysis Cell, and the underlying notification could not be opened to cross-check them.
Nothing is stated about a state luxury tax on hotels in Maharashtra, or about stamp duty rates, or about any tourist-specific state levy. The Maharashtra government portal was unreachable for this guide.
The Maharashtra excise duty document carries no date, notification number or effective date on its face. Its hosting page labels it 2025-26 and records a review date of 11 July 2025.
Fuel prices change daily. The figures above are for 16 September 2026, and the Petroleum Planning and Analysis Cell publishes the current ones.