The Finance Bill 2026 excludes the value of biogas or compressed biogas (CBG) contained in blended compressed natural gas (CNG) from the transaction value for excise duty purposes.
This means:
- Excise duty will not apply on the biogas/CBG portion of blended CNG
- GST already paid on biogas/CBG will not inflate the excise valuation
The amendment will come into effect from 2 February 2026, following changes to the relevant central excise notification.
The earlier notification that provided exemption only on the GST component of biogas/CBG has been withdrawn, ensuring a clean and simplified exemption framework.
Industry stakeholders have welcomed the move as it improves the commercial viability of green fuels.
Higher Excise Duty on Unblended Diesel Deferred
The Finance Bill, 2026 also defers the implementation of the proposed additional excise duty of Rs 2 per litre on unblended diesel.
The levy, which was earlier scheduled to take effect sooner, has now been postponed until 31st March 2028.
The deferment is seen as a measure to:
- Contain fuel inflation
- Protect transport and logistics costs
- Provide policy stability to the fuel sector
A Measured Approach to Excise Policy
Unlike previous years, excise changes in the Finance Bill, 2026 are not revenue-driven. Instead, they reflect a calibrated approach focused on:
- Structural realignment of duty schedules
- Encouraging green energy adoption
- Avoiding inflationary pressure on fuel prices
Tax professionals note that the amendments demonstrate policy restraint, balancing fiscal objectives with environmental and economic considerations.
Conclusion
The excise amendments in the Finance Bill, 2026 may be limited in number, but their impact is targeted and strategic. By maintaining effective tax rates on tobacco, incentivising clean fuel blending, and deferring diesel duty hikes, the government has signalled continuity and stability in excise policy.
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