Petrol, diesel and ATF are outside GST — they are taxed under central excise duty plus state VAT, kept out of GST by Article 279A of the Constitution. CNG, PNG and LPG attract 5% GST. A petrol pump's dealer commission from the oil company attracts 18% GST (SAC 9985), and pump services such as engine-oil sales, car wash and servicing are also taxed at 18%.
Petrol Pump — GST & Fuel-Tax Decision Table
Every product and service handled at a fuel station, the tax regime that applies, and whether Input Tax Credit can be claimed.
| Product / Service | Tax Regime | Rate | ITC |
|---|---|---|---|
| Petrol (Motor Spirit) | Excise + State VAT | Outside GST | No |
| Diesel (High-Speed Diesel) | Excise + State VAT | Outside GST | No |
| Aviation Turbine Fuel (ATF) | Excise + State VAT | Outside GST | No |
| CNG (automotive) | GST | 5% | Yes* |
| PNG (piped, domestic) | GST | 5% | — |
| LPG (cooking gas) | GST | 5% | — |
| Engine oil & lubricants | GST | 18% | Yes |
| Car wash / servicing (SAC 9987) | GST | 18% | Yes |
| Dealer commission (SAC 9985) | GST | 18% | — |
| Convenience-store goods | GST | 5%/18% | Yes |
*ITC on CNG only where the vehicle qualifies (goods transport / passenger service). Rates reflect the GST 2.0 two-slab structure effective 22 September 2025 — fuel-station items were not changed. Confirm on the official GST portal before invoicing.
Why Are Petrol & Diesel Not Under GST?
Five petroleum products — petrol, diesel, ATF, crude oil and natural gas — are constitutionally kept outside GST under Article 279A(5). Both the Centre (excise duty) and States (VAT) tax them independently, which is why fuel prices differ from state to state. Bringing them into GST needs a GST Council recommendation and, effectively, a constitutional trigger — repeatedly deferred because fuel VAT funds 15-20% of most states' tax revenue.
Under GST at the pump
- CNG dispensed to vehicles
- PNG / LPG cooking gas
- Uniform price within a state
- Businesses may claim ITC (qualifying use)
- One tax head on the invoice
Outside GST — excise + state VAT
- Petrol, diesel and ATF
- Central excise + state VAT stacked
- Prices vary state to state
- No GST invoice for fuel sales
- No ITC to buyers on fuel
Because petrol and diesel sit outside GST, a business buying fuel for its fleet gets no Input Tax Credit on it — the embedded excise and VAT become a pure cost. Only CNG (for a qualifying goods or passenger-transport vehicle) offers recoverable GST at the pump.
Run a fuel station and unsure what to invoice with GST?
Talk to a GST Expert →GST on Petrol Pump Dealer Commission
A petrol pump earns a dealer commission (margin) from the oil marketing company — IOCL, BPCL or HPCL — for retailing fuel. This is a commission-agent / intermediary service under SAC 9985 and attracts 18% GST. The dealer must raise a GST invoice on the commission and deposit the tax, even though the underlying fuel sale carries no GST.
How GST Applies at a Petrol Pump
No GST Fuel sale to customer
18% Commission from oil company
Fuel handed to the customer moves without any GST, but the dealer's own commission income is a taxable service — so a registered pump files GST on its margin, oil sales, car wash and shop, but never on petrol or diesel.
A petrol pump often has a "mixed" GST profile: exempt fuel turnover, 5% CNG, and 18% commission and services. Correctly splitting exempt vs taxable turnover matters for both your registration threshold and any ITC you claim on shared inputs.
Want your fuel, CNG and commission turnover split correctly for GST?
Get Petrol Pump GST Advice →GST Registration & Compliance for Petrol Pumps
Fuel turnover is exempt, but a pump earning commission, CNG sales, oil, servicing or shop income must register once its aggregate turnover of taxable supplies crosses ₹20 lakh (₹10 lakh in special-category states). Here is the compliance picture:
- GST registration (GSTIN)
- Split exempt fuel vs taxable turnover
- GST invoice on dealer commission
- 5% GST on CNG / PNG / LPG
- 18% GST on oil, car wash, servicing
- Correct HSN / SAC classification
- GSTR-1 (outward supplies)
- GSTR-3B (monthly/quarterly)
- ITC reconciliation on taxable inputs
- Reversal on inputs used for exempt fuel
- GSTR-9 annual return
- Books & records upkeep
| Activity at the pump | GST? | Rate |
|---|---|---|
| Selling petrol / diesel | No | Outside GST |
| Dealer commission from oil company | Yes | 18% |
| CNG sales to vehicles | Yes | 5% |
| Engine oil & lubricant sales | Yes | 18% |
| Car wash / servicing / repair | Yes | 18% |
A pump with only fuel turnover and no taxable service or commission income may fall outside the registration net — but commission from the oil company usually triggers it.
Frequently Asked Questions
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