Tax Laws and Practice · Levy and Collection of GST

Rates of GST and Taxation of Alcohol and Petroleum under Section 9

Updated 11 October 2026 · Fact-checked

Under section 9 of the CGST Act, CGST is levied on intra-State supplies at rates notified by the Government on the Council's recommendation, not exceeding 20%. Alcoholic liquor for human consumption is outside the levy. Petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel are taxed only from a date notified later.

Understand Rates of GST and Taxation of Alcohol and Petroleum

Section 9(1) of the CGST Act is the charging provision. It says CGST is levied on all intra-State supplies of goods or services or both, on the value determined under section 15, and the taxable person pays it. The section also fixes two limits: what is left out, and how high the rate can go.

The rate is not written in the Act. The Government notifies it, but only on the recommendations of the GST Council. So the law sets a ceiling, and the notification sets the actual rate within that ceiling. For CGST the ceiling is 20%. For IGST on inter-State supplies, section 5(1) of the IGST Act sets the ceiling at 40%. Do not mix the two numbers.

Now the exclusions. Section 9(1) excludes the supply of alcoholic liquor for human consumption. Since 1 November 2024 the exclusion also covers un-denatured extra neutral alcohol or rectified spirit used to make alcoholic liquor for human consumption. The same exclusion appears in section 5(1) of the IGST Act. So these supplies are outside the levy of CGST and IGST. Remember the words: it is liquor for human consumption, not every product containing alcohol.

Petroleum is different. Section 9(2) does not exclude it. It says the central tax on petroleum crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel shall be levied from a date notified by the Government on the Council's recommendation. Section 5(2) of the IGST Act says the same for integrated tax. So the charge is deferred until a notified date, and it is not a permanent exclusion.

So the difference to hold on to: alcohol for human consumption is excluded from the levy, while the five petroleum products are covered but the levy starts only from a notified date.

Key rules to remember

CGST rate ceiling: CGST rate ≤ 20% (section 9(1) CGST Act); Rate is notified by the Government on the Council's recommendation, within this ceiling.
IGST rate ceiling: IGST rate ≤ 40% (section 5(1) IGST Act); Applies to inter-State supplies. Do not confuse it with the CGST ceiling.
Excluded supply: Alcoholic liquor for human consumption (and un-denatured extra neutral alcohol or rectified spirit used to make it) is outside CGST and IGST levy; Section 9(1) CGST Act and section 5(1) IGST Act. The extra spirit wording was inserted w.e.f. 1-11-2024.
Deferred levy: Petroleum crude, high speed diesel, motor spirit (petrol), natural gas, aviation turbine fuel: tax levied from a notified date; Section 9(2) CGST Act and section 5(2) IGST Act. Date is notified on the Council's recommendation.
Charge base: Tax = notified rate × value determined under section 15; Value comes from section 15 of the CGST Act.

How to solve Rates of GST and Taxation of Alcohol and Petroleum questions

Use this method for any question on rate limits, alcohol or petroleum under section 9.

1Identify the supply: goods or services, and whether it is intra-State (CGST) or inter-State (IGST).
2Check whether it is alcoholic liquor for human consumption (or the spirit used to make it). If yes, state that it is excluded from the levy under section 9(1).
3Check whether it is one of the five petroleum products. If yes, state that tax applies only from a date notified under section 9(2), and check whether the facts say that date has come.
4For other supplies, state that the rate is notified by the Government on the Council's recommendation.
5Apply the ceiling: 20% for CGST, 40% for IGST. Check that the stated rate does not cross it.
6Compute tax on the section 15 value if figures are given.
7Write a clear conclusion citing the section.

Quickest way: Three-gate check

When to use it: For short-answer or MCQ-style written questions where you have a few minutes.

Gate 1: Is it liquor for human consumption? If yes, outside GST levy.
Gate 2: Is it one of the five petroleum products? If yes, levy only from the notified date.
Gate 3: Otherwise taxable at the notified rate, capped at 20% CGST or 40% IGST.
Write the section number next to each conclusion.

Common mistakes in Rates of GST and Taxation of Alcohol and Petroleum

Saying alcohol is exempt from GST
Students treat exclusion and exemption as the same.
Fix: Alcoholic liquor for human consumption is excluded from the levy in section 9(1). Exemption is a separate power under section 11.
Saying petroleum products are permanently outside GST
Students link petroleum with alcohol as one group.
Fix: Section 9(2) defers the levy to a notified date. It does not exclude these products.
Quoting 20% for IGST
The CGST ceiling is remembered and applied everywhere.
Fix: CGST ceiling is 20% (section 9(1)). IGST ceiling is 40% (section 5(1) IGST Act).
Saying Parliament fixes each rate in the Act
Students forget the notification route.
Fix: The Government notifies the rate on the Council's recommendation, within the ceiling.
Extending the alcohol exclusion to all alcohol-based products
The word alcohol is read loosely.
Fix: Use the exact words: alcoholic liquor for human consumption, plus the spirit used to make it.
Omitting the GST Council from the answer
Students write only that the Government notifies.
Fix: Always write: on the recommendations of the Council.

Worked examples

Example 1

A State-level trader supplies goods within the State. The Government wants CGST at 25% on them. Is this possible under section 9? Also state the maximum IGST rate for inter-State supplies.

Show the solution

Provision: section 9(1) CGST Act allows rates as notified on the Council's recommendation, not exceeding twenty per cent.
Analysis: 25% is above the ceiling of 20%.
For inter-State supplies, section 5(1) IGST Act sets the ceiling at forty per cent.

Answer: A CGST rate of 25% is not permitted because it exceeds the 20% ceiling in section 9(1). The maximum IGST rate is 40% under section 5(1) of the IGST Act.

Example 2

Explain whether CGST is leviable on (a) supply of whisky for human consumption and (b) intra-State supply of high speed diesel before any date is notified.

Show the solution

(a) Section 9(1) excepts the supply of alcoholic liquor for human consumption from the levy.
So no CGST is levied on whisky for human consumption.
(b) High speed diesel is listed in section 9(2).
Central tax on it is levied from a date notified by the Government on the Council's recommendation.
Until that date is notified and arrives, the levy does not take effect.

Answer: (a) CGST is not leviable on whisky for human consumption because it is excluded by section 9(1). (b) CGST on high speed diesel is not leviable until the date notified under section 9(2).

Exam tips

Write both limbs of section 9: ceiling and exclusions, with sub-section numbers.
Contrast alcohol (excluded) and petroleum (deferred) in one line; examiners like this.
Always state 20% for CGST and 40% for IGST separately.
Use the exact phrase on the recommendations of the Council in every answer on rates.
End with a one-line conclusion, since ICSI answers follow provision, analysis, conclusion.

Practice questions from Levy and Collection of GST

Rates of GST and Taxation of 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.

CMA IntermediateRates of Tax and Tax on Alcohol and Petroleum

Rates of GST and Taxation of Alcohol and Petroleum: frequently asked questions

What is the maximum rate of CGST?

Section 9(1) of the CGST Act says the rate notified shall not exceed twenty per cent. The actual rate is notified by the Government on the GST Council's recommendation.

Why is alcohol outside GST?

Section 9(1) excludes alcoholic liquor for human consumption from the levy of CGST, and section 5(1) of the IGST Act does the same for IGST. Since 1 November 2024 the exclusion also covers un-denatured extra neutral alcohol or rectified spirit used to make such liquor.

Is petroleum under GST?

Five petroleum products are named in section 9(2): petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel. Tax on them is levied only from a date notified on the Council's recommendation.

Who decides GST rates?

The Government notifies them, but only on the recommendations of the GST Council. The Act sets only the upper limit.