In the GST reforms implemented from September 22, taxes were reduced on 375 products, but there will be no impact on petrol, diesel, and alcohol. These remain outside the ambit of GST, and their prices are determined based on taxes and VAT levied by states.
GST Rate Cut: Major GST reforms were implemented in the country from September 22, 2025, which included a reduction in tax rates on 375 products. However, petrol and diesel have still not been brought under the GST ambit, and central excise duty and state VAT will continue to apply to them. Similarly, states retain the right to levy taxes on alcohol, which is why there will be no change in its prices.
Tax Reduced on 375 Products
The government states that this move will provide significant relief to ordinary consumers. While a 12 percent slab previously existed, most items falling under it have now been brought into the 5 percent tax bracket. Furthermore, approximately 90 percent of goods from the 28 percent slab have been removed and included in the 18 percent tax slab. Additionally, tobacco, cigarettes, luxury cars, and some other expensive goods have been placed in a special 40 percent slab.
Why are Petrol and Diesel Not Under GST?
Many might be wondering whether petrol and diesel will become cheaper after the GST reforms. In fact, petrol and diesel are still outside the purview of GST. Central government excise duty and state government VAT apply to their prices. This is why petrol and diesel prices vary from state to state.
The actual price of petrol and diesel without taxes is lower, but after adding taxes and other levies, the retail price increases significantly. The price available at petrol pumps also includes the dealer's commission and transport costs.
Disagreement Between Centre and States
The central government has long been considering bringing petrol and diesel under GST. However, states have objected to this, arguing that if these fuels come under the GST ambit, it would impact their tax collection. Currently, both the central and state governments agree that GST will not be levied on petrol and diesel.
These taxes are a significant source of revenue for both states and the centre, funding social schemes and welfare programs. This is why, for now, the GST reforms will have no impact on fuel prices.
No Impact on Alcohol Prices
The right to tax alcohol rests entirely with the states. State governments levy VAT and excise duty on it. Therefore, alcohol is also unaffected by GST reforms. Alcohol generates substantial revenue for states, which is why it has not been included in GST.
If a state government deems it appropriate, it can reduce VAT at its own level, which could lead to a decrease in alcohol prices. However, states have not taken any such steps for now.
Different Prices in Different States
In India, the price of alcohol varies from state to state. This is because each state implements a different tax structure. According to data from the International Spirits and Wine Association of India in May 2025, Goa levies the lowest excise duty on alcohol at 55 percent, whereas Karnataka has the highest rate at 80 percent.
This means that alcohol of the same brand is sold at different prices in different states. Similarly, the price of petrol and diesel also varies in each state. This difference mainly stems from taxes and duties.
What Will Change with GST Reforms?
The benefits of GST reforms will generally be seen in products that previously had higher taxes and have now been shifted to lower slabs. This will make household goods, electronics, packed food, and daily use items cheaper. However, products like petrol, diesel, and alcohol are currently not covered by these reforms.
This directly implies that ordinary consumers will feel some relief in their daily purchases, but they will not see any significant difference at petrol pumps and liquor stores.
