Fuel is outside GST, and that is the whole complication
When GST replaced most indirect taxes in 2017, five petroleum products were deliberately left out of it: crude oil, petrol, high-speed diesel, natural gas and aviation turbine fuel. They still carry central excise duty plus a state-level tax, which is why a litre of petrol costs meaningfully different amounts either side of a state border in a way that nothing else in your shop does.
Bringing them in is a decision for the GST Council, and it has been raised repeatedly without being done. Nothing in this guide assumes it will be, and nothing in your accounts should either.
So a fuel outlet sells across the boundary. The fuel itself is outside GST. The lubricants, the shop, a service bay, an air-and-water charge, rent from an ATM on the forecourt — all of those are ordinary supplies that sit inside it. Most businesses live entirely on one side or the other; a pump does not, and almost every peculiarity in its accounts comes from that.
The part that surprises people: your input credit gets reversed
Everything the outlet buys to keep running carries GST. Dispenser servicing, civil repairs, accounting fees, software, security, stationery, commercial rent — all of it comes with tax on the invoice, and in a normal business all of that tax is credit against what you collect.
It is not, here. Input credit is only available to the extent inputs are used for taxable supplies. Fuel sales are not taxable supplies under GST, so the credit on anything used across the whole business has to be apportioned between the two sides and the fuel share reversed. That apportionment runs on turnover, which for a fuel outlet means the overwhelming majority of it — a pump where fuel is ninety-odd per cent of turnover reverses ninety-odd per cent of the credit on its general overheads.
The practical effect is worth stating plainly, because it changes how you should read a quote: GST on your general costs is mostly a cost, not a credit. Software, maintenance contracts and professional fees are close to their gross price to you, not their net-of-tax price. A vendor quoting “plus GST, which you claim back” is describing a business that is not yours.
This is structure, not advice
Rates, thresholds, return forms and the exact apportionment mechanics change, and your position depends on facts this page cannot know. What is set out here is the shape of the problem so the conversation with your accountant starts in the right place — it is not a substitute for having one.
What it means for the records you keep
The apportionment runs on the ratio between your non-GST turnover and your taxable turnover. That makes one thing non-negotiable: fuel and non-fuel revenue have to be separable cleanly, for every period, without anybody reconstructing it at year end.
This is the same split a decent daily record already produces. Litres by grade at the day’s rate gives fuel revenue; lubricants, shop and services recorded on their own lines give the other. What causes trouble is an outlet that pools collections — one cash figure covering fuel and a packet of oil together — because the ratio then has to be estimated, and an estimated ratio is the kind of thing that gets questioned.
- Keep fuel revenue derived from litres and rate, not from what was collected — collections include credit settled from last month and exclude credit given today.
- Record lubricant and shop sales as their own line from the start. Splitting them out afterwards from a single day’s total is guesswork.
- Keep purchase invoices grouped by which side they serve, where they clearly serve one. A dispenser service contract is a fuel-side cost; shop shelving is not.
- Expect the reversal every year and budget for it, rather than discovering it as a surprise at filing.
Frequently asked questions
Is GST charged on petrol and diesel?
No. Both were kept outside GST when it was introduced and remain outside it, carrying central excise duty and a state-level tax instead. That is exactly why pump prices vary so much between states while the price of almost everything else does not — each state sets its own rate on fuel.
Do I need a GST registration if I only sell fuel?
Very few outlets only sell fuel. Lubricants, a shop, a service bay or rent from anything on the forecourt are all taxable supplies, and once you make taxable supplies the registration question turns on the threshold in force where you are. Because the answer depends on your own mix and on thresholds that change, confirm it with your accountant rather than assuming from the fuel side alone.
Why does my accountant reverse part of my input tax credit?
Because credit is only available for inputs used to make taxable supplies, and your fuel sales are not taxable supplies. Costs that serve the whole business have to be apportioned between the two sides on turnover, and the share attributable to fuel is reversed. On a typical outlet that is most of it.
Can I claim GST on my electricity bill?
There is none to claim. Electrical energy is itself outside the tax, so an electricity bill carries no GST for you to take credit of — which is a small mercy, given how much of it a canopy and a forecourt get through.
Will petrol and diesel be brought under GST?
It is a decision for the GST Council, which has discussed it more than once without acting. Plan on the position as it stands. If it does change it will change the arithmetic above substantially, and it will be widely reported long before it affects a return you have to file.