Gadkari seeks GST cut on crude ethanol to boost flex-fuel vehicle adoption

New Delhi: As the Centre and states deliberate on overhauling India's Goods and Services Tax (GST) framework, Union Road Transport Minister
Nitin Gadkari
has urged a reduction in
GST on crude ethanol
—from the current 18per cent to 5 per cent—to encourage the production and uptake of
flex-fuel vehicles
, reports TNN.
Currently, ethanol used under the
Ethanol Blended Petrol
(EBP) Programme attracts a concessional GST rate of 5per cent, but crude ethanol continues to be taxed at 18per cent. A source told TNN, Gadkari has pushed for rate parity between the two, warning that higher taxation on crude ethanol could dampen demand for 100per cent ethanol-powered vehicles. 'Why will people go for these vehicles if the price of crude ethanol is equal to or more than that of petrol?' the source quoted Gadkari as saying.
Despite over 400 fuel outlets offering 100per cent ethanol, consumer uptake remains low—something the minister believes can be reversed with a more favourable tax structure.
Why is it important
Gadkari's intervention comes at a time when the government is undertaking a comprehensive review of the GST structure. Finance Minister Nirmala Sitharaman, along with a team of officials, is examining rationalisation proposals ahead of formal discussions with states. The broader effort aims to simplify the GST regime, improve revenue efficiency, and address classification challenges that have emerged since its rollout in 2017.
While earlier attempts by two Groups of Ministers (GoMs) failed to yield actionable consensus, a third GoM is now evaluating the issue of cesses—especially the compensation cess, which is slated to expire in March next year.
The current GST system comprises four major slabs—5per cent, 12per cent, 18per cent, and 28per cent. While most items are taxed at 5per cent, the bulk of tax collections arise from the 18per cent category. Industry groups have long advocated rationalisation, especially consolidation of the 12per cent and 18per cent slabs into a single rate of 15-16per cent, although such a move could trigger both revenue losses and political resistance, particularly from states.
Gadkari's suggestion to lower the
GST on crude ethanol
dovetails with India's broader energy and mobility goals, including reducing oil imports and promoting alternative fuels. It remains to be seen whether this proposal will be factored into the final GST rejig currently under review.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Business Standard

an hour ago

• Business Standard

Rs 8,000 crore plan in works to clean Yamuna, fix drainage: Delhi CM

The Delhi government is currently working on more than 300 projects, allocated an outlay of Rs 8,000 crore, to clean Yamuna River and solve the city's sewage woes, Chief Minister Rekha Gupta said on Friday. Gupta held a meeting with Water Minister Parvesh Verma and top Delhi Jal Board (DJB) officials to review the work underway to fix the drainage and sewer system in the city. "The Delhi government is implementing a multi-pronged and phased plan for Yamuna rejuvenation, which includes drain treatment, sewerage network expansion and setting up of modern Sewage Treatment Plants (STPs)," the chief minister said in a statement. In the meeting, according to the statement, she reviewed a 45-point action plan, which included capacity enhancement and upgradation work at existing STPs located in Yamuna Vihar, Okhla, Keshopur, Vasant Kunj, Ghitorni, Mehrauli, and Molarbandh under the AMRUT 2.0 scheme and one each in Nilothi and Pappan Kalan. Gupta directed officials to replace old pipelines in phases. "Many parts of Delhi are still operating on decades-old water and sewer pipelines, which are no longer sustainable due to rapid urban growth and increasing demand. Officials have been instructed to undertake phase-wise planning and use modern technology to replace old infrastructure," she said. According to officials, the 303 drainage projects involve redevelopment of major drains, permanent solutions for waterlogging, installation of modern pumps, de-silting of drains, expansion of stormwater systems, and scientific drainage network management. Gupta said she will personally visit the Yamuna every month to check the progress in its cleaning. She also claimed that Delhi will soon become a 'model' city in terms of equitable water distribution under the Centre's Har Ghar Nal Se Jal initiative. Verma stated that strict directions have been issued for immediate action against the illegal discharge of untreated sewage and industrial waste in the city. "This is a crisis that can no longer be ignored. Delhi cannot afford to let untreated sewage flow into its lifelines. No polluter will be spared. We will act and act fast," he said.

Time of India

an hour ago

• Time of India

Repeal anti-worker amendments, labour unionists tell Punjab govt

Ludhiana: Factory workers and labourers have called for the immediate repeal of recent amendments to labour laws that they allege strip them of their fundamental rights and protections. The unions have urged the Punjab govt to uphold and enforce workers' legal entitlements, expand the labour department, and raise the minimum wage in the state. Lakhwinder Singh, president of Karkhana Mazdoor Union, recently said, "The workers are protesting against amendments made to the Punjab Shops and Commercial Establishments Act, 1958, which exclude establishments with fewer than 20 workers from the scope of basic labour protections. They argue that, if enforced, these changes will leave a large section of workers, particularly in shops and small businesses, without legal safeguards related to working hours, minimum wages, attendance records, or workplace safety. " The labour unions are also demanding the reversal of amendments made to the Factories Act during the Covid-19 lockdown by the previous govt, and again in Sept 2023 by the current govt. These amendments allow for extended overtime, up to four hours per day and 144 hours per quarter in commercial establishments, and up to 115 hours per quarter in factories. They fear that these changes legalise exploitative practices and normalise excessive work without addressing workers' core needs, especially decent wages. Another major point of their concern is the introduction of four new labour codes by the Centre. The unions want the Punjab legislative assembly to pass a resolution rejecting the implementation of these codes in the state. They said the new codes dilute long-standing worker protections under the guise of simplification and ease of doing business. The unions are also pressing for an increase in the monthly minimum wage to Rs 26,000, based on an eight-hour workday. They argue that many workers are currently forced to depend on overtime just to make ends meet. "Instead of creating conditions that force labourers into longer hours, the state should ensure a living wage that eliminates this compulsion altogether," said one union representative. In addition to repealing recent amendments, the workers have called for a comprehensive strengthening of the labour department, including hiring more officers and inspectors, expanding the number of labour courts, and improving the inspection framework for industries, shops, and commercial establishments. They emphasised the need for effective enforcement to stop ongoing violations of labour laws. The unions also alleged widespread corruption in the labour department and demanded strict action to eliminate bribery and red tape that has been affecting workers' access to justice.

Time of India

an hour ago

• Time of India

‘Punjab to lead India's industrial transformation'

1 2 3 Ludhiana: The Bharat Manufacturing and Export Summit 2025 concluded successfully Saturday, cementing the city's role as a cornerstone of India's industrial landscape. Punjab finance minister Harpal Singh Cheema was the chief guest of the event, organised by MSME Sampark. The summit called upon govt officials, industry leaders, entrepreneurs, and innovators to drive discussions on enhancing India's manufacturing and export capabilities, with a focus on the micro, small, and medium enterprises (MSME) ecosystem. Cheema underscored Punjab's commitment to fostering a robust industrial environment through initiatives like the fast-track single window system and the Invest Punjab Portal, designed to streamline processes and boost MSME growth. He emphasised the state's proactive measures to enhance ease of doing business, including financial incentives, infrastructure upgrades, and policies to support sustainable industrial practices. "Punjab is poised to lead India's industrial transformation by empowering MSMEs with innovative policies and seamless access to resources," Cheema said, reinforcing the state's dedication to economic progress. TNN