GST on petrol, diesel, alcohol: Are fuel, liquor getting cheaper from today? Here's what you need to know
While at least 375 items will see rate cuts, many are wondering what will happen to petrol, diesel, and alcohol prices under the latest GST reforms. Here's what's changing.
New GST Rates Today: India's indirect tax system is getting overhauled from Monday, September 22, with Goods and Services Tax (GST) rates slashed on at least 375 items in an effort to boost the economy amid tariff uncertainties.
In a festive cheer for consumers across India, the 56th GST Council, chaired by Finance Minister Nirmala Sitharaman, decided earlier this month to reduce tax rates on goods and services. Starting today, there will be just two GST slabs — 5% and 18% — replacing the earlier four GST slabs.
Following the rejig, approximately 99% of goods under the 12% GST slab have moved to 5%, while 90% of items under the 28% slab now fall into the 18% bracket.
The government has also announced a separate 40% GST slab for select items such as tobacco, cigarettes, luxury cars and a few others.
Nirmala Sitharaman said that the GST reforms will infuse ₹2 lakh crore into the economy, leaving people with more disposable income that would otherwise have gone toward taxes.
GST Reforms: Will petrol, diesel get cheaper?
Despite the sweeping changes, petrol and diesel currently remain outside the ambit of GST. Therefore, the latest GST reforms will not impact fuel prices.
In India, the base price of petrol, excluding taxes, is relatively lower than its retail price. This is because both the central and state governments levy taxes on fuel. Therefore, petrol and diesel prices vary from state to state, depending on how much tax the state government charges on fuel prices. The final retail price also includes dealer commissions and freight costs, among other things.
The different types of tax on petrol and diesel include Central excise duty and the value-added tax (VAT) by states. While the excise duty is uniform for all states, VAT varies from state to state, resulting in higher petrol prices in some states and lower in others.
Although the Centre has mulled bringing petrol and diesel under GST's ambit, states have pushed back, having already lost the autonomy to levy taxes covered by GST. Both the Centre and the States have justified their decision to exclude petrol and diesel from GST, saying that the existing taxes help fund many social programmes.
GST Rate Cut: Is alcohol getting cheaper?
Like petrol and diesel, alcohol prices will remain unaffected by the GST reforms that come into effect today.
The power to tax alcoholic beverages rests with the states, which impose VAT on these products.
States earn a large portion of their revenues from alcohol sales, which is why it remains outside the scope of GST. If the state governments decide to reduce VAT at any point, alcohol prices may be reduced accordingly.
Similar to petrol and diesel, the tax component of alcohol includes excise duty and VAT. Both these duties are charged by the state.
According to the latest data compiled by the International Spirits & Wine Association of India, cited by the Times of India in May 2025, Goa charges the lowest excise duty at 55%, while Karnataka charges the highest at 80%. States have been reluctant to give up the power to charge VAT on alcohol, resulting in different retail prices in different states.