The central government has exempted petrol blended with higher levels of ethanol from excise duty, aiming to make fuels beyond E20 more attractive for consumers and promote voluntary use. The Central Board of Indirect Taxes and Customs (CBIC) issued notifications on Wednesday, exempting ethanol blended petrol (EBP) grades E22, E25, E27, and E30, which contain 22% to 30% ethanol, from applicable central excise duties, provided that excise duty has already been paid on petrol and Goods and Services Tax (GST) has been paid on the ethanol used for blending.
Objective to Avoid Double Taxation
An official stated that the objective is to remove the deeming fiction under central excise law that could otherwise result in the levy of excise duty again upon the activity of blending ethanol with petrol, thereby avoiding any incidence of double taxation. The exemption mirrors the tax treatment 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 clarified.
Government Clarification
At a press conference, Sujata Sharma, joint secretary in the petroleum ministry, said: “A clarification has been issued for higher blends and there is nothing new with higher BIS standards available. The same excise duty waiver has been extended to E22, 25, 27, and E30. This is a preliminary prerequisite for eventually introducing higher blends but does not convey anything about roll out of higher blends as of now as that will only be done after extensive testing and consultation.”
The move is part of the government's broader strategy to increase ethanol blending in petrol, reduce dependence on fossil fuels, and support the agricultural sector. By exempting higher blends from excise duty, the government aims to encourage oil marketing companies and consumers to adopt these greener fuel options.
