In a significant step towards promoting cleaner fuels and advancing India’s ethanol blending programme, the Government has extended central excise duty exemptions to petrol blended with 22 per cent, 25 per cent, 27 per cent and 30 per cent ethanol. The exemptions apply to fuel blends conforming to the Bureau of Indian Standards (BIS) specification IS 19850, thereby encouraging the production and use of higher ethanol-blended fuels across the country.
The Department of Revenue, Ministry of Finance, has issued four notifications dated 10 June 2026 to operationalise these exemptions under various components of the central excise framework.
Under Notification No. 26/2026-Central Excise dated June 10, 2026, amendments have been made to Notification No. 11/2017-Central Excise to prescribe a nil rate of basic excise duty on ethanol-blended petrol containing 22%, 25%, 27% and 30% ethanol, subject to specified conditions. The exempted blends must comprise the prescribed proportion of duty-paid motor spirit and GST-paid ethanol and conform to BIS Specification IS 19850.
Notification No. 27/2026-Central Excise dated June 10, 2026, extends the exemption from Special Additional Excise Duty (SAED) under Notification No. 28/2002-Central Excise to the same categories of ethanol-blended petrol. The notification inserts new entries covering E22, E25, E27 and E30 petrol blends, providing a nil rate of SAED for these products meeting the stipulated composition and BIS standards.
Through Notification No. 28/2026-Central Excise dated June 10, 2026, the Government has exempted these higher ethanol-blended petrol variants from the Additional Duty of Excise (Road and Infrastructure Cess) leviable under section 112 of the Finance Act, 2018. The notification specifies that the applicable rate for 22%, 25%, 27% and 30% ethanol-blended petrol shall be nil, provided the blends satisfy the prescribed conditions regarding duty-paid inputs and compliance with IS 19850 standards.
Further, Notification No. 29/2026-Central Excise dated June 10, 2026, amends Notification No. 3/2021-Central Excise to extend a nil rate of Additional Duty of Excise (Agriculture Infrastructure and Development Cess) on petrol blended with 22%, 25%, 27% and 30% ethanol. The benefit is available only where the ethanol-blended petrol conforms to BIS specifications and consists of appropriately taxed constituent inputs.
Collectively, these notifications ensure that basic excise duty, Special Additional Excise Duty, Road and Infrastructure Cess, and Agriculture Infrastructure and Development Cess will not apply to BIS-compliant E22, E25, E27 and E30 ethanol-blended petrol.
The measure is expected to provide a strong fiscal impetus to the adoption of higher ethanol blends, support domestic ethanol production, enhance energy security by reducing dependence on imported fossil fuels, and contribute towards the country’s environmental sustainability objectives.
The notifications came into effect upon their publication in the Gazette of India Extraordinary on 10 June 2026.
Notification-wise Summary:
- Notification No. 26/2026-Central Excise – Nil Basic Excise Duty on E22, E25, E27 and E30 petrol blends.
- Notification No. 27/2026-Central Excise – Nil Special Additional Excise Duty (SAED) on E22, E25, E27 and E30 petrol blends.
- Notification No. 28/2026-Central Excise – Nil Additional Duty of Excise (Road and Infrastructure Cess) on E22, E25, E27 and E30 petrol blends.
- Notification No. 29/2026-Central Excise – Nil Additional Duty of Excise (Agriculture Infrastructure and Development Cess) on E22, E25, E27 and E30 petrol blends.
Background: India has been steadily expanding the scope of ethanol blending in petrol as part of its broader strategy to promote renewable fuels, improve farmer incomes, reduce greenhouse gas emissions, and strengthen energy self-reliance. The latest exemptions are aimed at facilitating the transition towards the use of higher ethanol blends in the transportation sector.
The Notifications can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/06/N-No.-26-to-29-2026-Central-Excise.pdf
