The Central Government on Thursday clarified that its recent decision to exempt higher ethanol-blended petrol (EBP) variants from central excise duty does not amount to a reduction in fuel taxes, but is instead aimed at preventing double taxation and supporting India’s ethanol blending programme. Officials stressed that the move is a technical adjustment intended to streamline taxation on blended fuels rather than a broader cut in petrol excise duty.

The clarification follows the issuance of multiple notifications—Nos. 26/2026-Central Excise to 29/2026-Central Excise—dated June 10, 2026, which came into effect immediately after being published in the Official Gazette. The exemptions apply to ethanol-blended petrol variants containing 22%, 25%, 27% and 30% ethanol, commonly referred to as E22, E25, E27 and E30.

According to government sources, the exemption is structured to ensure that excise duty is not applied twice on the same fuel components. While central excise duty has already been levied on the petrol portion and Goods and Services Tax (GST) applies to ethanol used in blending, the new framework prevents additional taxation on the final blended product. Officials said this alignment is intended to create consistency across India’s fuel taxation system.

Also Read: Maharashtra CM Fadnavis Warns Against Fuel Hoarding, Urges Public To Avoid Panic Buying

The policy extends zero-duty treatment previously available to lower ethanol blends such as E5, E10 and E20, thereby expanding the same tax logic to higher ethanol-content fuels. The move is seen as part of the government’s broader strategy to scale up ethanol blending in petrol, with an ambitious target of reaching up to 30% blending in the coming years to reduce dependence on conventional fossil fuels.

Industry stakeholders have long argued that overlapping tax structures on blended fuels could discourage the adoption of higher ethanol content, as it increases compliance complexity and raises operational costs for oil marketing companies. By removing such overlaps, the government aims to improve the commercial viability of high-blend ethanol fuels and support smoother rollout across supply chains.

Officials added that the exemption is expected to provide greater regulatory clarity to fuel distributors and oil marketing companies, while accelerating India’s transition toward cleaner and more domestically sourced fuel alternatives. The clarification also seeks to dispel misconceptions that the move represents a general reduction in excise duty on petrol used for domestic consumption.

Also Read: Government Exempts Higher Ethanol-Blended Petrol From All Excise Duties