--- title: "New GST on Petrol & Diesel 2026: Applicability, Rules & Tax" description: "New GST rate on petrol and diesel in 2026 is not applicable as fuel is outside GST scope. Stay GST-compliant with Busy and apply the correct rate automatically." canonical: "https://busy.in/gst-rates/petrol-diesel/" author: "Madan Murari" published: "2025-04-29T07:45:59.000Z" category: "GST Rates" --- - As of 2025, petrol and diesel in India are not taxed under GST, although they are included in the GST Act's scope. - Petrol prices currently include central excise duty, state VAT, dealer commission, and a base price set by oil companies. - Petrol is not under GST due to revenue dependence, state autonomy, and political reasons. - If petrol were under GST, it could lower prices and simplify taxes but would reduce state revenue. - Businesses cannot claim Input Tax Credit on petrol, increasing costs for sectors like logistics. # 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)**](https://busy.in/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. ## 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**](https://busy.in/gst/gst-fundamentals-all-about-goods-and-services-tax-in-india/) . 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**. **Get a Free Trial –** [**Best Accounting Software For Small Business**](https://busy.in/accounting-software/) Live Demo Available Today ## Track Petrol Pump Dealer-Wise Credit Sales Outstanding Trusted by 6,00,000+ Users 4.6 Google Rating \* No credit card required ## 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. **Get a Free Trial –** [**Best GST Accounting Software For Small Business**](https://busy.in/accounting-software/gst-accounting/) ## 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. **Get a Free Demo –** [**Best Billing and Invoicing Software**](https://busy.in/accounting-software/invoicing-and-gst-billing/) ## Input Tax Credit (ITC) and Petrol Since GST is not levied on petrol: - No [**Input Tax Credit (ITC)**](https://busy.in/gst/input-tax-credit/) 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. **Explore a Free Demo of –** [**Best Inventory Management Software For Small Business**](https://busy.in/accounting-software/inventory-management/) ## 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. ## About the author **Madan Murari** 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%. ## Related articles - [New GST on Skincare Products: Rate, Branding & Retail Pricing](https://busy.in/gst-rates/skincare-products/) - [New GST on Industrial Machinery: Slabs, ITC & MSME Effect](https://busy.in/gst-rates/industrial-machinery/) - [New GST on Restaurant Meals: Dine-in, Takeaway & Delivery Compared](https://busy.in/gst-rates/restaurant-meals/) - [New GST on Kitchen Utensils: What’s Taxed and What’s Not?](https://busy.in/gst-rates/kitchen-utensils/) - [New GST on Online Education: Rate, Exemptions & EdTech Impact](https://busy.in/gst-rates/online-education/) - [New GST on Packaging Materials: Tax Implication Across Industries](https://busy.in/gst-rates/packaging-materials/) - [New GST on Digital Marketing Services: Tax Rates & Input Credit Explained](https://busy.in/gst-rates/digital-marketing-services/) - [New GST on Pesticides: Rates, Agri-Exemptions & Sector Impact](https://busy.in/gst-rates/pesticides/) - [New GST on Butter: From Dairy to Dining – What You Pay](https://busy.in/gst-rates/butter/) - [GST on Honey: Rate, Applicability & Industry Outlook](https://busy.in/gst-rates/honey/)