Excise Exemption For Higher Ethanol-Petrol Blends Not A Duty Cut, Only Avoids Double Taxation

The Central Government on Thursday issued a clarification on exemption of higher ethanol-blended petrol (EBP) variants, E22, E25, E27 and E30, from central excise duty. According to the government the move is aimed at preventing double taxation and supporting India’s ethanol blending programme, government sources told NDTV Profit. People in the know, further added that the exemption is not an excise duty cut on petrol.

The exemptions were notified through Notification Nos. 26/2026-Central Excise to 29/2026-Central Excise, all dated June 10, 2026, and came into effect immediately upon publication in the Official Gazette.

According to government sources, the exemption applies to ethanol-blended petrol containing 22%, 25%, 27% and 30% ethanol, provided appropriate central excise duty has already been paid on the petrol component and Goods and Services Tax (GST) has been paid on the ethanol used for blending.

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The move amends existing central excise notifications dating back to 2002 and 2017, and extends zero-duty treatment that was previously available only to lower-blend fuels.

The exemption is designed to improve the economics of high-blend ethanol fuel for oil marketing companies, advancing India’s stated target of 30% ethanol blending in petrol.

The latest notifications extend the same tax treatment already available to lower ethanol blends such as E5, E10 and E20, ensuring consistency across the ethanol blending ecosystem as the government pushes for higher blending levels.

Industry participants have long argued that imposing excise duty on the blending process after taxes had already been paid on the underlying inputs could create an additional tax burden and discourage adoption of higher ethanol blends.

The exemption is expected to facilitate the rollout of higher ethanol-content fuels and provide greater clarity to oil marketing companies and fuel suppliers involved in blending operations.

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