The Government of India on December 08, 2025 in Lok Sabha clarified that petroleum products and alcoholic beverages are presently not proposed to be brought under the ambit of the Goods and Services Tax (GST), unless recommended by the GST Council. The clarification was issued in a written reply by Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, to an unstarred question regarding the inclusion of these products under GST.
Responding to concerns raised by Members of Parliament on price impact for consumers, particularly the middle- and lower-income groups, the Minister stated that States have exclusive constitutional powers to levy excise duty on alcoholic liquor for human consumption, as per Entry 51 of the State List of the Seventh Schedule. He further informed that Article 279A(5) of the Constitution mandates that the GST Council must recommend the date from which GST will be levied on petroleum crude, high-speed diesel, petrol, natural gas and aviation turbine fuel (ATF).
At present, the GST Council — where States are equally represented — has not made any recommendation for inclusion of petroleum products under GST, and therefore they continue under the current taxation structure.
Price Variations Across States
On the issue of inter-State price variations in petrol and diesel, the Government stated that fuel prices are market-determined, with Public Sector Oil Marketing Companies independently deciding the pricing structure. The final retail price includes Central Excise Duty and State-level VAT/Taxes, resulting in differences in fuel prices across the country due to freight rates and local levies.
Deliberations in GST Council
The reply further highlighted that during the 55th GST Council meeting, the issue of initiating structured deliberations for inclusion of Aviation Turbine Fuel (ATF) under GST was presented. However, the Council recommended maintaining status quo, with no decision taken toward inclusion of petroleum products under GST.
Revenue Implications
Questions regarding possible revenue implications — particularly for high-tax States such as Andhra Pradesh — were considered not applicable, given that no recommendation for inclusion under GST has been made.
Conclusion
The Government reiterated that any change in the taxation structure of petroleum or alcohol is subject to the GST Council’s recommendation, and until such time, the existing tax framework will continue.
The reply can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/12/INCLUSION-OF-PETROLEUM-AND-ALCOHOL-UNDER-GST.pdf
