Lok Sabha Question No. 1309 (UNSTARRED), answered on 2025-07-28
Subject: Reduction of GST on Flex-Fuel Vehicles
Ministry: FINANCE
Asked by: Dr. C M Ramesh

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE LOK SABHA UNSTARRED QUESTION NO. 1309

TO BE ANSWERED ON MONDAY, JULY 28, 2025 / SRAVANA 6, 1947 (SAKA)

## REDUCTION OF GST ON FLEX-FUEL VEHICLES

1309. DR. C M RAMESH:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Government  is  promoting  alternative  fuel  to  be used in vehicles;
- (b)  whether  it  is  true  that  States  are  levying  higher  GST  on  flexfuel  vehicle,  thereby  defeating  the  very  objective  of  pushing growth in automobile industry;
- (c) whether any appeal/request has been made by the Government to States to reduce GST on flex-fuels from the present 28% to 12%; (d) if so, the details thereof;
- (e)  whether  the  Government  is  considering  to  reduce  the  above duties to 5% as is being done in case of Electric Vehicles and 12% in the case of hydrogen fuel cell vehicles;
- (f) whether any discussion on the above issue has been held in the
- GST Council; and
- (g) if so, the details thereof

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SHRI PANKAJ CHAUDHARY)

- (a)  The  government  is  taking  many  measures  for  promotion  of
- alternative fuels to be used in vehicles:
- (i) Ministry of Petroleum and Natural Gas has revised the guideline for granting authorization to market Motor Spirit and High-Speed  Diesel.  The  authorized  entities  and  the  public sector  Oil  Marketing  companies  are  now  required  to  install facilities for marketing at least one new generation alternate fuels  like  Compressed  Natural  Gas  (CNG),  biofuels,  Liquefied Natural Gas (LNG), electric vehicle charging stations (EVCSs), etc.  at  their  proposed  retail  outlets  within  three  years  of operationalization  of  the  said  outlet  subject  to  the  entity complying with various other statutory guidelines.
- (ii) Ministry of Road Transport & Highways (MoRTH) has notified emission norms to facilitate the use of various alternative fuel vehicles, ensuring their compliance to standards. These norms cover Ethanol-blended fuels, hydrogen, CBG, LNG and Electric Vehicles (EV).
- (iii) Based on the recommendation of the GST Council, a concessional GST rate of 5% has been prescribed on ethanol and biodiesel supplied to Oil Marketing Companies or Petroleum  refineries  for  blending  with  motor  spirit  and  highspeed diesel oil.
- (iv) Blending  of  duty  paid  petrol  with  duty  paid  ethanol  and  duty paid  biodiesel  with  high-    speed  diesel  has  been  exempted from excise duty.
- (v) Unblended petrol attracts an additional excise duty of Rs 2 per litre.
- (b)  The  GST  rates  are  based  on  the  recommendation  of  the  GST Council, which is a constitutional body comprising of member from the Centre and State governments. Presently the GST rate applicable  on  internal  combustion  vehicles  is  28%  irrespective  of the type of fuel used including alternative fuels.
- (c)  &  (d)  The  GST  rates  are  based  on  the  recommendation  of  the GST Council, which is a constitutional body comprising of member from the Union and State governments/UTs. The issue of reduction of  the  GST  rate  on  flex  fuel  vehicles  was  deliberated  by  the  GST Council in its 52 nd  Meeting held on 07.10.2023. However, the Council has  not  recommended  any  change  in  this  regard.  However,  the Ministry of Road Transport & Highways (MoRTH) has requested all States Governments and Union Territories to consider exemption or reduction  of  road  tax  on  Flex  Fuel  Vehicles  (FFVs)  as  a  fiscal incentive to users.
- (e)  to  (g)  The  GST  rates  are  based  on  the  recommendation  of  the GST Council, which is a constitutional body comprising of member from the Union and State governments/UTs. The issue of reduction of  the  GST  rate  on  flex  fuel  vehicles  was  deliberated  by  the  GST Council in its 52 nd  Meeting held on 07.10.2023. However, the Council has not recommended any change in this regard.

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