Government extends Nil excise duty to higher ethanol-blended petrol variants

The Central Government has further widened the excise duty relief available to ethanol-blended petrol by issuing Notification No. 26/2026-Central Excise dated 10th June, 2026. This notification modifies Notification No. 11/2017-Central Excise to introduce additional categories of blended petrol that are eligible for a Nil rate of central excise duty, thereby strengthening the policy framework for cleaner transport fuels.

Under this amendment, new entries 5E to 5H are incorporated in the existing exemption notification to specifically cover petrol blended with 22%, 25%, 27% and 30% ethanol by volume. These new entries operate alongside the earlier notified ethanol blending slabs and are intended to support a progressive scaling-up of ethanol content in petrol.

Statutory basis for the exemption

The exemption has been notified by the Central Government in exercise of its powers under sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944). This provision empowers the Government to grant exemptions from excise duty, wholly or partially, where it is satisfied that such relief is required in the public interest.

Key point: The notification explicitly records that the Government is acting in the public interest, aligning fiscal policy with environmental and energy security objectives.

Linkage with Notification No. 11/2017-Central Excise

The newly issued Notification No. 26/2026-Central Excise amends the earlier Notification No. 11/2017-Central Excise, dated 30th June, 2017, which provides the basic framework for excise duty rates on various petroleum products, including ethanol-blended petrol.

  • The principal notification was originally published vide G.S.R. 793(E), dated 30th June, 2017.
  • It had been most recently amended through Notification No. 02/2026-Central Excise, dated 1st February, 2026, issued vide G.S.R. 86(E), dated 1st February, 2026.
  • The current amendment builds on this framework by inserting new serial numbers and clarifying the coverage through an updated explanation.

New excise exemption entries for higher ethanol blends

Insertion of Sl. Nos. 5E to 5H in the Table

The core change under Notification No. 26/2026-Central Excise is the insertion of four new serial entries in the Table of Notification No. 11/2017-Central Excise, immediately after Sl. No. 5D. These are:

  • Sl. No. 5E – 22% ethanol blended petrol
  • Sl. No. 5F – 25% ethanol blended petrol
  • Sl. No. 5G – 27% ethanol blended petrol
  • Sl. No. 5H – 30% ethanol blended petrol

All these entries fall under Tariff Heading 2710 12 and are provided a Nil rate of central excise duty, subject to stringent conditions regarding composition, tax payment, and product standards.

Common conditions across all four new entries

Despite the different ethanol percentages, the following common features apply to Sl. Nos. 5E, 5F, 5G and 5H:

  1. Blended product definition
    Each entry relates to “ethanol blended petrol that is a blend” and specifies:

    • A defined proportion of motor spirit (commonly known as petrol) by volume; and
    • A defined proportion of ethanol by volume.

  2. Tax compliance on components
    For the Nil central excise rate to apply:

    • The motor spirit component must have already suffered the appropriate duties of excise.
    • The ethanol portion must have borne the applicable Central tax, State tax, Union territory tax or Integrated tax, as relevant under the GST regime.