GST on Petrol and Diesel in 2025: Find the HSN Code and GST Applicability

What Is the GST Rate on Petrol and Diesel?

Petrol and diesel are not covered under the GST (Goods and Services Tax) regime. These fuels continue to be taxed through traditional methods such as VAT (Value Added Tax), central excise duty, and central sales tax.

Latest News About GST Rates on Petrol and Diesel

• Finance Minister Nirmala Sitharaman reaffirmed the government’s intent to bring GST on petrol and diesel. The provision for including these fuels in GST law was already made when the GST was introduced in 2017.
• During the 53rd GST Council meeting in June 2024, Nirmala Sitharaman highlighted that the central government favors this move but emphasised that the decision rests with the states. The challenge lies in bringing all states to a consensus, as the inclusion would significantly impact their revenue streams.
• As of 2024, petrol and diesel remain outside India’s GST framework. These essential fuels are still subject to taxes such as VAT, central excise duty, and central sales tax, which vary from state to state. Including petrol and diesel under GST has been an ongoing topic of discussion.

GST on Fuel and Petroleum Products

Why do Petrol and Diesel rates vary for Different States?

Petrol and diesel prices differ across states due to the various taxes imposed by state and central governments. Each state has the authority to set its VAT rates, which leads to price differences. Central excise duty is a uniform tax levied by the central government across the country, but state-specific VAT creates the variation.

In addition to VAT and excise duty, dealer commissions and local sales taxes also contribute to these price fluctuations. Since each state has its tax structure, the final price for petrol or diesel depends mainly on where you purchase it.

State Wise Tax on Petrol and Diesel in India

Petrol Tax Breakup

Here’s the breakdown of the petrol tax for Delhi as of 1st May 2024 to understand how the price is structured:

1. Price chargeable to dealers: ₹55.66 per liter
2. Dealer commission: ₹3.77 per litre
3. Excise duty (charged by the Central Government): ₹19.90 per litre
4. VAT (charged by the State Government): ₹15.39 per litre (This is calculated as 19.4% of the sum of the price chargeable to dealers, dealer commission, and excise duty)

Thus, the total retail selling price of petrol in Delhi amounts to ₹94.72 per liter.

Diesel Tax Breakup

Here’s the tax breakup for diesel in Delhi as of 1st May 2024:

1. Price chargeable to dealers: ₹56.42 per liter
2. Dealer commission: ₹2.58 per litre
3. Excise duty (charged by the Central Government): ₹15.80 per litre
4. VAT (charged by the State Government): ₹12.82 per liter (This is calculated as 16.75% of the sum of the price chargeable to dealers, dealer commission, and excise duty)

The total retail selling price of diesel in Delhi is ₹87.62 per liter.

What Are the Government’s Plans on Imposing GST on Petrol and Diesel?

Currently, there are no plans to include crude oil, petrol, diesel, aviation turbine fuel (ATF), or natural gas under the Goods and Services Tax (GST). Finance Minister Nirmala Sitharaman stated that the GST Council has yet to recommend this inclusion despite discussions on the matter.

Sitharaman indicated that including fuel under GST could help businesses offset input taxes and standardise taxation nationwide. However, the GST Council has yet to decide on this issue.

Conclusion

The inclusion of petrol and diesel under GST remains a subject of active debate. While the central government has shown clear intent to bring these fuels into the GST fold, the final decision rests with the states. As discussions continue in the GST Council, consumers and businesses await a consensus that could streamline fuel taxation and reduce price disparities across India. Until then, petrol and diesel will remain subject to state-specific VAT and central excise duties.

Frequently Asked Questions (FAQ’s)

1. What is the HSN code for petrol and diesel?

Currently, petrol and diesel fall outside the GST framework, so there is no HSN code, and the GST rate for petrol and diesel.

2. How much GST is on petrol in India?

There is no GST on petrol in India as of 2024. Instead, petrol is taxed through VAT, central excise duty, and central sales tax.

3. Why is petrol not under GST?

Petrol is not under GST because states have not yet agreed to include it. The Centre is willing to bring it under GST, but states prefer the current tax structure, which allows them to set VAT rates individually and generate revenue.

4. What if petrol comes under GST?

If petrol comes under GST, it could lead to uniform pricing across states, potentially lowering fuel costs for consumers.

5. Why is petrol price high in India?

Petrol prices in India are high due to various factors, including high VAT rates set by states, central excise duties, and global crude oil prices. The current tax structure allows states to impose taxes, leading to price differences and higher costs.