With a potential eye to popularise the uptake of biofuels in the country, the government late Wednesday (June 10, 2026) exempted the levy of central excise duty on petrol blended with greater quantum of ethanol, that is 22% to 30%.
In other words, petrol blended with ethanol, at 22%, 25%, 27% and 30% would be exempt from central excise duties.
“This is a preliminary prerequisite for eventually introducing higher blends but doesn’t convey anything about roll out of higher blends as of now as that will only be done after extensive testing and consultation,” it stated.
“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,” it clarified, adding, “For ethanol blends of petrol up to 20%, excise duty on the blended petrol was exempted by the Ministry of Finance.
With a potential eye to popularise the uptake of biofuels in the country, the government late Wednesday (June 10, 2026) exempted the levy of central excise duty on petrol blended with greater quantum of ethanol, that is 22% to 30%.
In other words, petrol blended with ethanol, at 22%, 25%, 27% and 30% would be exempt from central excise duties.
The Bureau of Indian Standards (BIS) had notified fuel standards for the blends May 19 this year. They are not presently available commercially.
In a statement, the government clarified that the latest reduction does not indicate anything on rolling out higher blends.
“This is a preliminary prerequisite for eventually introducing higher blends but doesn’t convey anything about roll out of higher blends as of now as that will only be done after extensive testing and consultation,” it stated.
The government clarified that the exemption specifically concerns the blending activity of ethanol with petrol which essentially is a manufacturing activity. The objective is to avert the possibility of a dual levy.
“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,” it clarified, adding, “For ethanol blends of petrol 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.”
The gazette notification comes days after India formally launched the E85 variant of petrol, that is 85% ethanol blended with 15% gasoline, on June 5.
E85 is about ₹20 per litre cheaper than the E20 variant of petrol, that is, the regular variant.
Industry associations across the ethanol blending value chain welcomed the move.
C.K. Jain, President of the Grain Ethanol Manufacturers Association (GEMA) the move indicates a “strong signal of policy stability and long-term commitment”.
“It is essential for attracting fresh investments across the ethanol value chain, including production capacity, logistics, storage, fuel retailing and flex-fuel mobility solutions,” he said.
In a similar statement welcoming the move, Bharati Balaji, Deputy Director General at the All-India Distillers Association (AIDA) added, “We urge the state governments to complement this measure with aligned tax structures so that the full benefit reaches both industry and consumers at the pump.”
