What is the new excise duty exemption for biogas-CNG?

The FY27 budget has exempted the value of biogas/compressed biogas (CBG) contained in blended CNG from the calculation of central excise duty, effectively making it zero.

How will the excise duty exemption impact CNG retailers?

The exemption is expected to lower overall costs for CNG retailers, potentially leading to improved margins in the short term as companies may not immediately cut retail prices.

What other energy-related allocations were made in the FY27 budget?

The budget allocated Rs 9,200 crore for new Ujjwala gas connections and deferred the imposition of an additional duty on unblended diesel by two years to April 2028.

Home / Business and Economy / Excise Duty Cut on Biogas-CNG: Retailers Get a Boost

Excise Duty Cut on Biogas-CNG: Retailers Get a Boost

1 Feb

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Summary

Excise duty on biogas blended with CNG is now exempt.
This change is expected to lower costs and improve retailer margins.
The budget also allocated funds for new Ujjwala gas connections.

Excise Duty Cut on Biogas-CNG: Retailers Get a Boost

Gas retailers are anticipating improved margins and lower costs due to a recent government decision exempting excise duty on biogas blended with compressed natural gas (CNG). This measure, introduced in the FY27 budget, effectively removes the excise duty applicable to the biogas component in blended CNG.

While the national average for biogas blending in CNG remains around 1%, specific outlets closer to production centers exhibit higher blend ratios. Industry experts suggest that companies may not immediately reduce retail prices, leading to a short-term increase in profit margins for retailers. India currently utilizes approximately 250,000 kg of biogas daily within its CNG blending program.

In parallel, the FY27 budget has allocated Rs 9,200 crore for new Ujjwala gas connections, a reduction from the Rs 12,736 crore provided in the current fiscal year, though no specific target for new connections was set. The budget also saw no allocation for filling strategic petroleum reserves and deferred a planned Rs 2 per litre additional duty on unblended diesel to April 2028.