GST 2025: Big Tax Cuts Announced, But No Relief on Petrol, Diesel & Alcohol

The Union Finance Minister, Nirmala Sitharaman, said in an interview that there is no expectation of petroleum products and alcohol to be included under the scope of GST in the future. She said, “The current proposal does not include it. Not in the immediate future.”

When GST came into effect in July 2017, the petroleum products (like petrol and diesel) and alcohol were intentionally left out of the new indirect tax regime. This is because both the central and state governments earn a lot of money from these through excise duty and VAT. States have always been against adding them to GST because they worry it would reduce their control over finances and lead to a loss of revenue.

This means that petrol, diesel, and alcohol are still taxed separately, so their prices at stores stay high, even though the GST reforms of 2025 have reduced taxes on almost all other goods and services.

The finance minister says that under the new GST reforms of 2025, almost all items are taxed under three slabs of 5%, 18%, and 40%. She said, “Ninety-nine per cent of all goods and services touched by GST are now either in zero, 5%, or 18%. Only 1% falls under the 40% demerit rate.” These reforms are aimed towards simplifying the system and eliminating anomalies.

The 56th GST council meeting held on September 3-4, 2025, led by the Finance Minister, Nirmala Sitharaman, has given approval to the GST cuts as recommended by the Union Government in its list. Council has cut GST on several categories of goods like shampoo and hair oil, and also on automobiles and electronic goods. These introduced changes in GST rates are scheduled to take effect from September 22, 2025, aimed at easing of living for the common man and strengthening the economy. However, the petroleum products and alcohol are still kept away from the GST reforms as of now.

While petrol, diesel and alcohol remain out of GST for now, experts think that this will only be possible if the Centre and states strongly agree on it. For now, the government has made it clear that keeping finances stable and protecting state revenues is more important.