GST on Petrol Pump 2025-26 — Petrol/Diesel Tax, CNG GST Rate & Dealer Commission
Updated: 3 June 2026 | FY 2025-26 | Central Excise + State VAT | SAC 9985
Petrol and diesel are NOT under GST — they are taxed under Central Excise Duty plus State VAT, kept outside GST by the Constitution (Article 279A). CNG for vehicles attracts 5% GST. LPG (cooking) attracts 5% GST. The dealer commission earned by petrol pump operators attracts 18% GST (SAC 9985 — intermediary service). Services at petrol pumps — car wash, lubrication, engine oil sales — also attract 18% GST. Aviation Turbine Fuel (ATF) is also outside GST (state VAT + excise duty).
NOT GST
Petrol and diesel remain outside GST — taxed under central excise + state VAT.
CNG: 5% GST. LPG cooking gas: 5% GST. Petrol pump dealer commission: 18% GST. Car wash at pump: 18%. Engine oil: 18%.
CNG: 5% GST. LPG cooking gas: 5% GST. Petrol pump dealer commission: 18% GST. Car wash at pump: 18%. Engine oil: 18%.
Fuel Type Tax Classification — GST vs Excise + VAT
| Fuel / Product | Tax Type | Rate / Regime | Notes |
|---|---|---|---|
| Petrol (MS — Motor Spirit) | Central Excise + State VAT | Excise ~₹19.9/L + VAT 25–35% (state) | Outside GST; price varies by state |
| Diesel (HSD — High Speed Diesel) | Central Excise + State VAT | Excise ~₹15.8/L + VAT 17–28% (state) | Outside GST; price varies by state |
| Aviation Turbine Fuel (ATF) | Central Excise + State VAT | Excise 11% + VAT (state-wise) | Outside GST; airline cost driver |
| CNG — Compressed Natural Gas (automotive) | GST | 5% | Under GST; uniform price within state |
| LPG — Liquefied Petroleum Gas (cooking) | GST | 5% | Subsidised cylinder: 5% GST on commercial; household: 5% |
| PNG — Piped Natural Gas (domestic) | GST | 5% | City gas distribution; household cooking |
| Engine oil / lubricants sold at pump | GST | 18% | HSN 2710; separate from fuel sales |
| Car wash service at petrol pump | GST | 18% | SAC 9987 — cleaning/maintenance service |
| Lubrication / tyre air service | GST | 18% | Service provided at petrol pump |
| Petrol pump dealer commission from oil co. | GST | 18% | SAC 9985 — intermediary/commission agent service |
| Accessories sold at pump (tyres, batteries) | GST | 18% / 28% | Standard GST rates apply to goods sold |
Petrol Pump — GST Registration & Compliance
| Activity | GST Applicability | Notes |
|---|---|---|
| Selling petrol/diesel (main activity) | NOT subject to GST | Revenue from fuel sales: no GST invoice needed for fuel |
| Dealer commission from oil company | 18% GST | Must issue GST invoice; SAC 9985 |
| CNG sales to customers | 5% GST collected | Oil company typically manages CNG GST compliance |
| Engine oil / lubricant sales | 18% GST | Separate from fuel; GST invoice required |
| Car wash / tyre change / repair service | 18% GST | Service invoice required if GST registered |
| Shop at pump (convenience store) | Standard GST rates | FMCG: 5–18%; snacks, beverages: specific rates |
Frequently Asked Questions
Why is petrol and diesel not under GST?
Petrol, diesel, aviation turbine fuel (ATF), crude oil, and natural gas are specifically excluded from the GST framework under Article 279A of the Constitution of India. These 5 petroleum products are kept outside GST to allow both the Central Government (which earns excise duty) and State Governments (which earn VAT and other levies) to independently tax them — a major revenue source for both. Bringing petrol under GST would require a unanimous resolution by the GST Council and a constitutional amendment. Despite industry demands, the GST Council has repeatedly deferred this decision. As a result, petrol and diesel continue to be taxed under Central Excise Duty (central) plus State VAT (state level), making fuel prices vary across states.
What is the GST rate on CNG (Compressed Natural Gas) for vehicles?
CNG (Compressed Natural Gas) used as automotive fuel attracts 5% GST. This applies to CNG dispensed at petrol pumps for vehicles (cars, buses, auto-rickshaws). The low 5% GST rate on CNG is a deliberate policy to encourage adoption of cleaner fuel. PNG (Piped Natural Gas) supplied to households for cooking also attracts 5% GST. However, note that the gas distribution companies (CGD — City Gas Distribution companies) pay GST on CNG/PNG at 5%, and the end consumer at the pump pays the MRP which includes this tax. Businesses (fleet operators, transport companies) using CNG in registered vehicles can claim ITC on the 5% GST paid on CNG purchased.
Do petrol pump dealers pay GST on their commission?
Yes. Petrol pump dealers (also called oil company dealers or fuel retail outlets) earn a dealer commission/margin from oil companies (IOCL, BPCL, HPCL) for selling petrol, diesel, and CNG. This commission is an intermediary/agency service and attracts 18% GST under SAC code 9985 (intermediary service / commission agent). The petrol pump dealer must: register under GST if turnover exceeds ₹20 lakh (₹10 lakh in special category states); issue a GST invoice/receipt for the commission earned; file GSTR-1 and GSTR-3B. The oil company typically pays the dealer commission, and the dealer must charge 18% GST on this commission amount and deposit it with the government.
Can a business claim ITC on CNG purchased for company vehicles?
ITC on CNG for business vehicles depends on vehicle type. Under Section 17(5) of CGST Act, ITC is BLOCKED on motor vehicles and services related to them for most purposes. However, ITC on fuel (including CNG) is allowed if: (1) The vehicle is used for transportation of goods (commercial vehicle, truck, tempos) — ITC on CNG allowed. (2) The vehicle is used for providing passenger transportation services (cab service, bus operator, auto-rickshaw service) — ITC on CNG allowed. (3) The vehicle is used for employee conveyance / personal use — ITC on CNG is BLOCKED. Most regular office cars, SUVs used for employee travel: ITC on CNG not available. Transport and logistics businesses: ITC fully available.
When will petrol and diesel be brought under GST in India?
There is no confirmed timeline for including petrol and diesel under GST. The GST Council, despite discussing the matter in multiple meetings, has consistently deferred inclusion citing revenue impact for state governments — state VAT on petrol contributes 15–20% of state tax revenues in most states. For GST inclusion of petrol/diesel: a GST Council resolution (requires three-fourths majority of members present and voting) is needed, followed by a constitutional amendment to remove the exclusion in Article 279A(4). The Petroleum and Natural Gas Regulatory Board and industry bodies continue to advocate for inclusion, which would create a uniform fuel price across India and reduce logistics costs. However, as of FY 2025-26, petrol and diesel remain outside GST.
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