**Policy Summary: Excise Duties on Petrol and Diesel (August 21, 2025)**
This document summarizes the Indian government's policy regarding excise duties on petrol and diesel as of August 21, 2025, responding to Lok Sabha Unstarred Question No. 4795.
Currently, retail prices of petrol and diesel are market-determined by Public Sector Oil Marketing Companies (OMCs), incorporating excise duty levied by the central government and Value Added Tax (VAT) levied by individual state governments. Consequently, prices vary across states due to factors such as freight rates and local levies.
The central government reduced excise duties on petrol and diesel in November 2021 (Rs. 13/litre and Rs. 16/litre respectively) and May 2022 (amount unspecified). While most states reduced VAT to complement this, some did not. In April 2025, excise duty on both fuels was increased by Rs. 2 per litre, but this increase was absorbed and not passed on to consumers.
The Goods and Services Tax (GST) Council considered including petrol, diesel, and other petroleum products under the GST regime during its 45th meeting on September 17, 2021. However, due to concerns regarding significant revenue implications, the matter was deferred for further deliberation. As of August 2025, the GST Council has not revisited this issue.
Contact: Minister of State in the Ministry of Petroleum and Natural Gas, Shri Suresh Gopi.
Key Entities Referenced
LOK SABHA: The lower house of the Parliament of India, where the question was raised.
PETROLEUM AND NATURAL GAS: The ministry responsible for petroleum and natural gas-related matters in the Union Government.
SHRI KARAN BHUSHAN SINGH: Member of Parliament who raised the unstarred question.
SHRI SURESH GOPI: Minister of State in the Ministry of Petroleum and Natural Gas who provided the answer.
Public Sector Oil Marketing Companies (OMCs): Government-owned companies involved in the marketing and distribution of petroleum products.
Value Added Tax (VAT): A consumption tax levied by State Governments on the sale of goods and services, including petrol and diesel.
GST Council: A constitutional body responsible for making recommendations on issues related to Goods and Services Tax (GST) in India.
Goods and Services Tax (GST): An indirect tax levied on the supply of goods and services in India.
LOK SABHA
UNSTARRED QUESTION NO. 4795
TO BE ANSWERED ON 21 AUGUST, 2025
Reduction of Excise Duties on Petrol and Diesel
4795. SHRI KARAN BHUSHAN SINGH:
पेट(cid:332)ोिलयम और (cid:366)ाकृ ितक गैस मं(cid:361)ी
Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:
(a) whether the Union Government has reduced excise duties on petrol and diesel in recent years
and the State Governments have also taken steps to provide relief to the consumers and if so, the
details thereof;
(b) whether the retail fuel prices continue to vary across the States and if so, the details thereof;
and
(c) whether the Government is exploring a harmonised tax framework in consultation with the
States to promote price uniformity and if so, the details thereof?
ANSWER
पेट(cid:332)ोिलयम और (cid:366)ाकृ ितक गैस मं(cid:361)ालय म(cid:336) रा(cid:475) मं(cid:361)ी
((cid:373)ी सुरेश गोपी)
MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS
(SHRI SURESH GOPI)
(a) & (b): Prices of petrol and diesel are market determined and Public Sector Oil Marketing
Companies (OMCs) take appropriate decision on pricing of petrol and diesel. The final selling
prices of petrol and diesel include excise duty fixed by the Central Government and State Value
Added Tax (VAT)/Taxes fixed by the respective State Governments. The prices of petrol and
diesel in the States across the country vary due to freight rates, VAT/local levies etc.
Central Government uniformly decreased the prices across the country by reducing excise duty
in November 2021 and May 2022 of Rs. 13/litre and Rs. 16/litre on petrol and diesel
respectively.
While most State governments reduced VAT rate to provide further relief to citizens, some State
Governments did not.
In April 2025, excise duty on Petrol and Diesel was increased by Rs. 2 per litre each but this was
not passed on to consumers.
(c) The GST Council in its 45th meeting held on 17th September 2021 had considered the
inclusion of Petrol/Diesel and other petroleum products under the GST regime but the matter was
deferred by the Council till larger deliberations on account of its heavy repercussions on the
exchequer. The issue has not been taken up by the Council as an agenda item for any further
deliberation subsequent to the said meeting.
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