Budget 2026 may focus on stability in petrol and diesel prices with GST inclusion still uncertain amid revenue concerns and global oil volatility.
Petrol and Diesel Budget 2026
Petrol & Diesel Budget 2026: As Budget 2026 approaches, fuel prices are back in the spotlight as Fuel prices have a bearing on how families budget their expenditure, the cost of transporting goods and inflation. Fuel taxes contributed over Rs 5.5 lakh crore to the exchequer in 2024, which explains why the expectations are so high.
The prices of petrol have been high despite the fall in the prices of crude oil at times since India imports around 85% of its crude oil, it is vulnerable to international price variations. In the larger cities, petrol is priced between Rs 95 to Rs 105 per liter where consumers are hoping for some respite in terms of excise duty changes or a tax rationalization plan in the Budget 2026.
Diesel is very important for the economy around 40% of the transportation of goods relies on diesel-based transport. Therefore, any change in diesel policy has an impact on food prices and transport costs. In recent years, the prices of diesel have been more or less similar to petrol, ranging between Rs 90 and Rs 100 per liter.
Fuel remains outside the GST taxation system largely because of revenue reasons and the Centre levies excise duty and states earn heavily from VAT. This combination offers a stable and flexible source of revenue and leaving fuel outside the GST system also helps in making quicker changes in taxes when crude prices or the rupee move rapidly.
The coverage under GST might bring down the costs for businesses where the input tax credit on fuel would help cut expenses in logistics, aviation and manufacturing. As of now, fuel taxes are treated as sunk costs and there could be a standardized structure for taxation as well.
It is not a certainty that prices will come down even after the implementation of GST, it is essential that rates are trimmed in a manner that does not jeopardize state taxes. International crude prices have been ranging around USD 80 per barrel and will remain a decisive factor.
The Centre has indicated readiness to include GST, but this is subject to agreement with the states from a legal perspective, GST on petrol and diesel can begin only after a notification is made. At this stage, no timeline has been set and this keeps expectations low for Budget 2026.
