Direct and Indirect Taxation · Levy and Collection of CGST and IGST

GST Rates, Alcohol and Petroleum under CGST and IGST

Updated 10 October 2026 · Fact-checked

CGST is levied on intra-State supplies and IGST on inter-State supplies, at rates the Government notifies on the Council's recommendation. The Acts cap CGST at 20% and IGST at 40%. Alcoholic liquor for human consumption is outside GST. Petroleum crude, diesel, petrol, natural gas and aviation turbine fuel are taxed only from a notified date.

Understand Rates of Tax and Tax on Alcohol and Petroleum

The charging sections do not fix a single GST rate. Section 9 of the CGST Act and Section 5 of the IGST Act only set a ceiling. The actual rate for each good or service comes from a notification issued by the Government on the recommendations of the GST Council.

The ceiling is different in each Act. Under Section 9(1) of the CGST Act, the rate cannot exceed twenty per cent. Under Section 5(1) of the IGST Act, it cannot exceed forty per cent. Rates can be changed by a fresh notification, but never above these limits unless Parliament amends the Act.

Two groups of goods are treated specially. First, alcoholic liquor for human consumption is excluded from the levy. Since 1-11-2024, the exclusion also covers un-denatured extra neutral alcohol or rectified spirit used to make alcoholic liquor for human consumption. Second, five petroleum products are within the charging section but the levy starts only from a date notified on the Council's recommendation. These are petroleum crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel.

The tax is charged on the value determined under Section 15 of the CGST Act and is paid by the taxable person. Imported goods have a separate rule: IGST on them is collected as per Section 3 of the Customs Tariff Act, 1975, at the point where customs duties are levied. Goods the Government notifies may be excluded from that proviso.

A common confusion: 'not taxed under GST' does not mean the product is untaxed. Alcohol for human consumption and, until notified, petroleum products still bear other taxes such as State excise or VAT. Your answer should only say what the GST Acts provide.

Key rules to remember

CGST rate ceiling: CGST rate ≤ 20% (Section 9(1), CGST Act); Applies to intra-State supplies. The actual rate is notified by the Government on the Council's recommendation.
IGST rate ceiling: IGST rate ≤ 40% (Section 5(1), IGST Act); Applies to inter-State supplies. Notified in the same manner.
Alcoholic liquor exclusion: No CGST or IGST on alcoholic liquor for human consumption, and on un-denatured extra neutral alcohol or rectified spirit used to make it; The extra neutral alcohol and rectified spirit words were inserted w.e.f. 1-11-2024.
Petroleum products: CGST: Section 9(2). IGST: Section 5(2). Levy from a date notified on the Council's recommendation; Covers petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel.
Value on which tax is charged: Value determined under Section 15 of the CGST Act; Both CGST and IGST use this value.
IGST on imports: Levied under Section 3 of the Customs Tariff Act, 1975, on value as per that Act, when customs duty is levied; Proviso to Section 5(1) of the IGST Act. Notified goods are excluded from the proviso.

How to solve Rates of Tax and Tax on Alcohol and Petroleum questions

Use this method for any question on rate, ceiling, alcohol or petroleum under CGST and IGST.

1Decide the nature of the supply: intra-State means CGST (plus State GST), inter-State means IGST.
2Identify the good. Is it alcoholic liquor for human consumption, or one of the five petroleum products? If neither, go to step 5.
3If it is alcoholic liquor for human consumption, state that GST is not levied. Mention the 2024 extension to un-denatured extra neutral alcohol or rectified spirit used for making it.
4If it is a petroleum product, state that GST applies only from the date notified on the Council's recommendation. Check whether the question says a date has been notified.
5For other goods, state that the rate is as notified, and check it against the ceiling: 20% for CGST, 40% for IGST.
6Name the authority: the Government, on the recommendations of the GST Council, by notification.
7Quote the value basis (Section 15 CGST) if a computation is needed, then state the conclusion clearly.

Quickest way: Three-check shortcut

When to use it: For MCQs and short true/false style questions on levy limits and excluded goods.

Check the product: alcohol for human consumption means no GST.
Check petroleum: the five products mean GST only from a notified date.
Check the rate against the ceiling: CGST 20%, IGST 40%. Anything above is not permitted by the Act.
Check who acts: Government on the Council's recommendation, never the Council alone.

Common mistakes in Rates of Tax and Tax on Alcohol and Petroleum

Writing that the ceiling is 20% for both CGST and IGST.
Students remember one number and assume both Acts match.
Fix: Remember 20% for CGST (Section 9) and 40% for IGST (Section 5).
Saying alcohol is exempt from GST in every form.
The word 'alcohol' is read loosely.
Fix: Say 'alcoholic liquor for human consumption'. Industrial alcohol is not covered by this exclusion, except the extra neutral alcohol or rectified spirit used for making liquor for human consumption.
Saying petrol and diesel are permanently outside GST.
Students mix up the exclusion for alcohol with the deferment for petroleum.
Fix: Petroleum products are within the charging provision but the levy begins only from a notified date.
Listing only petrol and diesel as petroleum products.
Everyday fuels dominate memory.
Fix: Learn all five: petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel.
Saying the GST Council fixes the rates.
The Council is widely reported in news.
Fix: The Council recommends. The Government notifies the rates.
Applying the normal levy rule to imported goods under IGST.
Students overlook the proviso to Section 5(1).
Fix: IGST on imports is levied and collected as per Section 3 of the Customs Tariff Act, 1975, when customs duty is levied.

Worked examples

Example 1

State whether the Government can notify a CGST rate of 25% on a class of intra-State supplies of goods. Can it notify an IGST rate of 25% on the same class when moved inter-State? Give reasons.

Show the solution

CGST is charged on intra-State supplies under Section 9(1) of the CGST Act at rates not exceeding twenty per cent.
25% exceeds 20%, so a CGST rate of 25% cannot be notified without amending the Act.
IGST on inter-State supplies is charged under Section 5(1) of the IGST Act at rates not exceeding forty per cent.
25% is below 40%, so an IGST rate of 25% is within the ceiling.

Answer: A CGST rate of 25% is not permissible because the ceiling is 20%. An IGST rate of 25% is permissible because the ceiling is 40%. In both cases the rate is notified by the Government on the Council's recommendation.

Example 2

Rohan Distillers of Nashik sells (a) alcoholic liquor for human consumption to a retailer in Pune, and (b) aviation turbine fuel to an airline in Delhi. Discuss the GST position under the charging sections.

Show the solution

Section 9(1) of the CGST Act and Section 5(1) of the IGST Act exclude alcoholic liquor for human consumption from the levy.
So supply (a) attracts no CGST or IGST. Other laws, such as State excise, may apply, but they are outside GST.
Aviation turbine fuel is one of the five products in Section 9(2) CGST and Section 5(2) IGST.
The levy on it applies only from a date notified by the Government on the Council's recommendation.
Supply (b) is inter-State, so IGST would apply only after that date is notified. Before that date, no GST is levied on it.

Answer: Supply (a) is outside GST. Supply (b) is an inter-State supply of a petroleum product, so IGST applies only from the notified date.

Exam tips

Write both section numbers: Section 9 of the CGST Act and Section 5 of the IGST Act. Examiners reward correct citations.
In MCQs, watch for options that swap 20% and 40%, or that call alcohol or petrol 'exempt'.
In written answers, give the reason in one line: the Government notifies the rate on the Council's recommendation.
List all five petroleum products from memory. Partial lists lose marks.
Keep GST and other taxes apart. Say only what the GST Acts provide.

Practice questions from Levy and Collection of CGST and IGST

Rates of Tax and Tax on Alcohol and Petroleum in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CS ExecutiveRates of GST and Taxation of Alcohol and Petroleum

Rates of Tax and Tax on Alcohol and Petroleum: frequently asked questions

What is the maximum rate of CGST and IGST?

CGST cannot exceed 20% under Section 9(1) of the CGST Act. IGST cannot exceed 40% under Section 5(1) of the IGST Act. The actual rates are lower or equal and are set by notification.

Is GST levied on alcohol for human consumption?

No. Both Acts except alcoholic liquor for human consumption from the levy. Since 1-11-2024 the exception also covers un-denatured extra neutral alcohol or rectified spirit used to make such liquor.

Is GST levied on petrol and diesel?

The Acts provide that tax on petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel is levied from a date the Government notifies on the Council's recommendation. Until that date, GST is not levied on them.

Who notifies GST rates?

The Government notifies the rates, acting on the recommendations of the GST Council. The Council itself only recommends.