Centre exempts E22, E25, E27 and E30 petrol from excise duty as ethanol push gathers pace

The Centre on Wednesday exempted higher ethanol-blended petrol variants containing up to 30% ethanol from central excise duty rates and related levies to facilitate the rollout of higher blending fuels and support the country's ethanol blending programme.

The Department of Revenue, under the Ministry of Finance, issued a series of notifications on Wednesday, June 10, providing excise duty exemptions and concessional treatment for petrol blended with 22%, 25%, 27% and 30% ethanol.

The government amended an earlier exemption notification to include 22%, 25%, 27% and 30% ethanol-blended petrol and prescribed a nil rate of central excise duty for such fuels.

It also extended a nil rate of special additional excise duty on the higher ethanol-blended petrol variants.

In another notification, the government exempted the same categories of ethanol-blended petrol from the additional duty of excise levied as Road and Infrastructure Cess, with the applicable rate fixed at nil.

The Revenue Department also amended the Agriculture Infrastructure and Development Cess-related notification to provide similar concessional treatment for petrol blended with 22-30% ethanol.

The exemptions will apply to fuel blends comprising 78% petrol and 22% ethanol, 75% petrol and 25% ethanol, 73% petrol and 27% ethanol, and 70% petrol and 30% ethanol.

The move comes weeks after the Bureau of Indian Standards (BIS) notified fuel specifications for E22, E25, E27 and E30 blends, establishing the technical standards required for their use in petrol-powered vehicles.

Road Transport and Highways Minister Nitin Gadkari recently said India should aspire to achieve 100% ethanol blending in the near future to become self-reliant in the energy sector.

Last week, India launched E85 fuel, a high-ethanol blend designed for flex-fuel vehicles, at ₹20 a litre discount to normal petrol.

The fuel will initially be available at select petrol pumps and can be used only in vehicles with flex fuel engines.

Union Petroleum and Natural Gas Minister Hardeep Singh Puri said the government plans to expand its availability to 500 outlets by December 2026 and to about 5,000 outlets by December 2027.

E85 contains 80-85% ethanol and 14-19% petrol, and can be used only in flex-fuel vehicles capable of operating on ethanol blends ranging from E20 to E100.