Lagatar24 Desk
As India’s new GST reforms took effect on September 22, cutting rates on more than 375 items, many wondered if petrol, diesel and alcohol would also become cheaper. However, the Finance Ministry has clarified that fuel and liquor remain outside the ambit of the Goods and Services Tax, meaning the latest cuts will not reduce their prices.
Fuel Prices Unaffected by GST 2.0
Despite sweeping changes that now leave only two slabs — 5% and 18% — plus a special 40% bracket for select goods, petrol and diesel are excluded from GST. They continue to be taxed through central excise duty and state-level value-added tax (VAT), along with dealer commissions and freight charges, leading to varying retail prices across states. While the Centre has occasionally proposed bringing fuels under GST, states have resisted, citing revenue needs for social programmes.
Liquor Taxation Remains a State Subject
Alcoholic beverages are also untouched by the reforms because states retain exclusive rights to tax liquor through excise duty and VAT. These levies form a significant part of state revenues, and rates vary widely — from Goa’s 55% excise duty to Karnataka’s 80%. Any reduction in alcohol prices would depend on individual states choosing to lower VAT or excise duties, not on national GST changes.
