Petrol blended with higher levels of ethanol will now attract nil central excise duty, with the Centre extending the exemption to E22, E25, E27 and E30 fuel variants that meet Bureau of Indian Standards specifications.
The move gives a fiscal push to India’s ethanol blending programme at a time when the government is trying to expand the use of biofuels, cut dependence on crude oil imports and promote domestic renewable fuel usage.
According to official notifications issued by the Ministry of Finance’s Department of Revenue and published in The Gazette of India, the exemption applies to petrol blends containing 22 per cent, 25 per cent, 27 per cent and 30 per cent ethanol by volume.
The exemption has been granted under Section 5A of the Central Excise Act, 1944, IANS reported.
What the excise duty exemption covers
“22% ethanol blended petrol that is a blend, – (a) consisting, by volume, of 78% motor spirit, (commonly known as petrol), on which the appropriate duties of excise have been paid and of 22% ethanol on which the appropriate Central tax, State tax, Union territory tax or Integrated tax, as the case may be, have been paid; and (b) conforming to the Bureau of Indian Standards specification IS 19850,” the Gazette stated.
The same framework applies to the other notified blends. In the case of E30 petrol, the blend must contain 70 per cent motor spirit and 30 per cent ethanol by volume, with the respective duties and taxes already paid on the components.
“30% ethanol blended petrol that is a blend, – (a) consisting, by volume, of 70% motor spirit, (commonly known as petrol), on which the appropriate duties of excise have been paid and of 30% ethanol on which the appropriate Central tax, State tax, Union territory tax or Integrated tax, as the case may be, have been paid; and (b) conforming to the Bureau of Indian Standards specification IS 19850,” it stated.
Why higher ethanol petrol blends matter for India
The duty change comes as India continues to push ethanol blending in petrol under its broader biofuel policy. The government has steadily increased blending levels over the past few years, supported by policy changes under the National Policy on Biofuels and revised targets advanced to 2025-26.
In a separate development, the government recently launched E85 fuel for compatible flex-fuel vehicles.
Union Petroleum and Natural Gas Minister Hardeep Singh Puri has highlighted India’s progress in ethanol blending, saying the share of ethanol in petrol has risen sharply since 2014.
“From 2014 until now, we have increased ethanol blending from 1.5 per cent to 10 per cent, which was achieved in November 2022. Our target was to achieve 20 per cent blending by 2030, but we completed it in 2024 itself,” Puri said, according to IANS.
What counts as appropriate excise duty
The notification’s explanation section states that appropriate duties of excise include duties leviable under the Fourth Schedule to the Central Excise Act, 1944, the additional duty of excise under Section 112 of the Finance Act, 2018, and the special additional excise duty under Section 147 of the Finance Act, 2002.
It also includes the Agriculture Infrastructure and Development Cess leviable under Section 125 of the Finance Act, 2021.