New GST on Petrol in India: Is It Included or Exempt?

Petrol is one of the most essential commodities in India—fueling not just vehicles, but also affecting the cost of transportation, food, and other daily essentials. While the  Goods and Services Tax (GST)  has replaced most indirect taxes in India, a common question still arises: Is GST applicable on petrol in India?

In this blog, we’ll break down the status of gst on petrol, what taxes currently apply, and whether GST will ever be included in fuel prices.

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Is Petrol Included Under GST?

No, as of 2025, petrol and diesel are not taxed under GST. Even though the GST Act includes petrol, diesel, natural gas, aviation turbine fuel (ATF), and crude oil under its scope, the GST Council has not yet brought them under the  GST regime . Until that happens, state and central taxes continue to apply.

What Taxes Apply on Petrol Now?

Currently, the price you pay for petrol includes a mix of:

Tax Type Levied By
Central Excise Duty Central Government
State VAT (Value Added Tax) State Governments
Dealer Commission Paid to Retailers
Base Price Set by Oil Companies

This results in high petrol prices, often making up over 50% in taxes alone.

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Why Isn’t GST Applied on Petrol?

There are several reasons why petrol hasn’t been brought under GST:

  1. Revenue Dependence: Both central and state governments rely heavily on fuel taxes for income.
  2. Autonomy for States: VAT on fuel gives states financial flexibility.
  3. Political Sensitivity: Any sharp drop in tax revenue could disrupt budgets and welfare programs.

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What Would Happen If Petrol Comes Under GST?

If petrol is brought under GST, it could lead to:

  • Lower retail prices, especially if taxed at 18% or lower
  • Simplified tax structure across states
  • Reduced input cost for businesses in logistics, transport, and manufacturing

But it would also lead to a huge revenue loss for state governments, which is why the move has been delayed repeatedly.

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Input Tax Credit (ITC) and Petrol

Since GST is not levied on petrol:

  • No  Input Tax Credit (ITC)  is available for businesses on fuel expenses.
  • This leads to higher input costs, especially for sectors like logistics and delivery services.
  • Many companies factor fuel as a cost rather than a creditable input.

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New GST on Fuel for Related Products

The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates and SAC mapping for broadband and related telecom internet services (no compensation cess).

Product New GST Rate HSN Code
Engine oil 18% 2710
Grease and lubricants 18% 2710
Fuel additives 18% 3811

Note: Under the rationalised slabs, prior 18% lines generally continue at 18% (12% items map to 5%, 28% items to 18%, unless specifically notified).

Old GST on Fuel for Related Products

(Old GST Rates – Applicable Until 21st September)

While petrol is outside GST, lubricants, engine oils, and fuel additives do fall under GST:

Product GST Rate HSN Code
Engine oil 18% 2710
Grease and lubricants 18% 2710
Fuel additives 18% 3811

Final Thoughts

While gst on petrol remains a hot topic, it is currently excluded from the GST framework. This means that even in a post-GST economy, petrol is still taxed under the old system. As policy discussions evolve, petrol may one day be brought under GST—but until then, high excise and VAT continue to fuel India’s pump prices.

Madan Murari
Madan Murari
Chartered Accountant
MRN No.: 509164
City: Patna

Hi there! I’m a Chartered Accountant with over 20 years of experience in financial accounting and a passion for writing. I enjoy simplifying complex topics like GST and income tax, believing that learning should be a lifelong journey. I'm here to share insights and make financial matters easier for everyone!

Frequently Asked Questions

  • Is GST charged on petrol in India?
    No. Petrol is taxed under central excise and state VAT, not GST.
  • Will petrol come under GST in the future?
    It may be included in the future, but no fixed timeline has been announced by the GST Council.
  • Can I claim GST credit on petrol expenses?
    No. Since petrol is not under GST, ITC is not available on petrol costs.
  • What is the current tax rate on petrol?
    It varies by state. Central excise is fixed, but VAT ranges from 15% to 35%.
  • Are any petroleum products under GST?
    Yes. LPG (non-domestic), lubricants, and engine oil are under GST, usually taxed at 18%.
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