Govt exempts higher ethanol petrol blends from excise duty

The exemption ensures that the duties already paid are not charged a second time on the blend

PTI New Delhi

The Central government has exempted higher ethanol-blended petrol grades from central excise duty to prevent double taxation on fuel blending activities, according to official notifications.  

The Central Board of Indirect Taxes and Customs (CBIC) issued notifications exempting ethanol-blended petrol (EBP) grades E22, E25, E27 and E30—containing 22%, 25%, 27% and 30% ethanol, respectively—from applicable central excise duties. This exemption remains subject to excise duty having already been paid on petrol and GST having been paid on the ethanol used for blending. 

"Ethanol blending with petrol is a manufacturing activity which can be subjected to excise duty. Petrol bears excise duty, and ethanol bears GST at their respective stages. When the two are blended, the resulting product may attract excise duty once again on the full quantity," an official statement said. 

For ethanol blends of up to 20%, excise duty on the blended petrol was exempted by the Ministry of Finance. The exemption ensures that the duties already paid are not charged a second time on the blend. 

Government sources said the move is intended solely to remove a provision under the Central Excise law that could otherwise treat ethanol blending as a manufacturing activity and result in excise duty being levied a second time on the blended fuel. The objective is to avoid any incidence of double taxation. 

The exemption mirrors the tax treatment already available to existing ethanol-blended petrol grades such as E5, E10 and E20, and does not amount to a reduction in excise duty on petrol sold for domestic consumption, officials said. 

The notifications came into force on June 10, 2026, the date of their publication in the Official Gazette.