New GST on Petrol in India: Is It Included or Exempt?
- As of 2026, gst on petrol and diesel is not applicable in India because petrol and diesel are currently outside the GST levy.
- Petrol and diesel prices include components such as central excise duty, state VAT, dealer commission, and the base price charged by oil companies.
- Petrol and diesel remain outside GST until the GST Council recommends their inclusion and the required notification is issued.
- If petroleum products are brought under GST in the future, the impact on prices and taxation will depend on the GST rate and applicable rules.
- Businesses generally cannot claim GST Input Tax Credit on petrol and diesel because these products are currently outside the GST framework.
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 |
Tax Type
Levied By
Tax Type
Levied By
Tax Type
Levied By
Tax Type
Levied By
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:
- Revenue Dependence: Both central and state governments rely heavily on fuel taxes for income.
- Autonomy for States: VAT on fuel gives states financial flexibility.
- 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 in the future, it could lead to:
- Potential changes in retail prices, depending on the GST rate decided and how existing taxes are replaced.
- Simplified tax structure by bringing petroleum products under a common GST framework across states.
- Potential reduction in input costs for businesses in logistics, transport, and manufacturing if GST Input Tax Credit becomes available.
However, bringing petrol under GST could impact state government revenues, as states currently collect VAT on petroleum products.
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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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GST Rate on Fuel-Related Products
The applicable GST rates for fuel-related products such as engine oil, lubricants, and additives are provided below.
| Product | HSN Code | New GST Rate (After 22 Sep 2025) | Old GST Rate (Before 22 Sep 2025) |
|---|---|---|---|
| Engine oil | 2710 | 18% | 18% |
| Grease and lubricants | 2710 | 18% | 18% |
| Fuel additives | 3811 | 18% | 18% |
Product
HSN Code
New GST Rate (After 22 Sep 2025)
Old GST Rate (Before 22 Sep 2025)
Product
HSN Code
New GST Rate (After 22 Sep 2025)
Old GST Rate (Before 22 Sep 2025)
Product
HSN Code
New GST Rate (After 22 Sep 2025)
Old GST Rate (Before 22 Sep 2025)
Note: No major GST rate change has been introduced for these fuel-related products. The applicable GST rate depends on the product classification and HSN code.
Final Thoughts
While petrol gst 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.
