1. The method, reused and extended

This piece uses the same conversion an earlier ethanol-SGST series has used throughout: PPAC's state-wise annual Motor Spirit (petrol) sales data (FY2024-25, the latest full year published), converted to litres at a standard 0.74 kg/litre density, with ethanol volume taken as 20% of that (today's national E20 blend) and priced at ₹60/litre — the same fixed assumption the companion pieces use. This method reproduces the companion piece's own published figures almost exactly (Maharashtra: 5.91 billion litres of petrol-equivalent volume in that piece vs. 5.91 billion litres independently recomputed here from the raw PPAC file; Karnataka: 0.83 billion litres of ethanol in both) — confirming the two pieces are directly comparable rather than using silently different assumptions.

2. National picture: pushing the rate past 5%

The companion piece's own Section 3.4 modelled a dedicated levy from 1% to 5%, on top of the existing embedded 2.5%, finding it recovers only 3–18% of the states' VAT shortfall from ethanol blending. Framed as a single total state SGST-equivalent rate on ethanol (today's 2.5%, rising to 5%, 7.5%, 10%, 12.5%, 15%), the national numbers extend cleanly:

National ethanol value at E20: ₹64,872 crore/year (36 states/UTs matched to PPAC's FY2024-25 state-wise MS sales table, 0.74 kg/L density, ₹60/litre ethanol price). Even at 15%, this is a smaller number than the ₹17,863 crore net state VAT shortfall a companion piece calculated at the same E20 blend — consistent with that piece's own finding that full parity via an ethanol-only rate would need something close to 27%, at which point the levy stops being small and starts moving the pump price.

3. State by state: who earns most from a higher rate

All figures at today's E20 blend, ₹60/litre ethanol, 0.74 kg/L density, PPAC FY2024-25 state-wise MS consumption. Rankings by ethanol volume, which tracks petrol-market size rather than VAT rate — note the ranking here differs from the companion piece's "top 15 by net loss" ranking, which is weighted by VAT rate too. Tamil Nadu, for instance, ranks 3rd here on volume alone despite one of the lowest petrol VAT rates in the country (13%), because it's simply a very large petrol market. Bihar and Odisha both round to 0.31 bn L of ethanol at this precision — their underlying PPAC petrol volumes are close but not identical (1.57 vs 1.56 bn L, per the companion piece's Section 3.2 table), which is why their SGST figures coincide at 2.5% and 5% but diverge slightly at 7.5% and 10%, computed independently for each state from its own petrol volume rather than copied across rows.

Uttar Pradesh tops this list on volume alone — it's India's largest petrol market by PPAC's own figures — despite not carrying an especially high VAT rate (19.36%, per the companion piece). At 10%, UP's SGST-on-ethanol take would rise from ₹196 crore to ₹784 crore a year, an extra ₹588 crore — a real number, but tiny next to UP's own ~₹1,776 crore net VAT shortfall from ethanol blending (VAT foregone net of today's 2.5% SGST) at the same E20 blend that the companion piece calculated. Even at the highest rate modelled here (15%), no state gets more than about half its ethanol-blending VAT loss back through the SGST rate alone.

4. Net impact: still a loss at every rate modelled, just a smaller one

Sections 2 and 3 showed the extra SGST each rate would raise. Neither figure is the state's actual bottom line — the companion piece's own ₹19,485 crore national VAT-foregone figure doesn't move with the SGST rate, because it's calculated from the petrol VAT the state would have collected on the volume ethanol displaced, a number that has nothing to do with what rate applies to the ethanol itself. Netting the two together, state by state, is the number that actually matters for a state finance department deciding whether this is worth pursuing:

National net position = total SGST at that rate minus the companion piece's ₹19,485 crore VAT-foregone figure at E20 (held constant across rate scenarios, since it doesn't depend on the ethanol SGST rate). "Gap closed" is measured against the companion piece's own ₹17,863 crore net-loss figure (the state of play at today's embedded 2.5%), using only the extra revenue above that baseline. This reconciles exactly with the companion piece's own numbers: its "additional 5% dedicated levy" scenario is this piece's 7.5% total-rate scenario, and both independently arrive at an 18.2% gap closure.

No rate modelled here, including 15%, gets any state to net-positive. But the state-level picture isn't uniform, and it doesn't track the same ranking as raw ethanol volume in Section 3 — it tracks each state's own VAT rate as much as its volume, because a low-VAT state has a smaller VAT-foregone number to close in the first place:

VAT-foregone figures per state are the companion piece's own published Section 3.2 figures at E20 (headline petrol VAT, excludes cesses/floors). SGST figures are this piece's own extension (Section 3). Net = SGST at that rate minus VAT foregone, both at E20.

Tamil Nadu and Gujarat stand out here: both are large petrol markets, but because their VAT rates are among the lowest in the country (13% and 13.7%), their VAT-foregone number is small enough that a 15% ethanol SGST rate would close the gap almost entirely — Tamil Nadu's net position improves from −₹825 crore today to just −₹108 crore at 15%, an 86.9% closure, the best of any state in this table. Maharashtra and Karnataka show the opposite pattern: high VAT rates mean a large gap to begin with, so even the largest rate modelled here leaves them a bigger absolute shortfall than Tamil Nadu started with. The states that would gain the most from a higher ethanol SGST rate, in relative terms, are exactly the low-VAT states a companion piece already flagged as "losing least" under today's system — a higher rate compresses the remaining gap fastest precisely where the gap was already smallest.

5. Does Karnataka's 2024 fuel-tax hike prove this is achievable? Not directly

Karnataka gives this question a real, recent precedent to test against — but it's an imperfect one. In June 2024, Karnataka raised its own state sales tax on petrol from 25.92% to 29.84% and on diesel from 14.34% to 18.44%, a straight ₹3/litre increase, expected to earn the state an additional ₹2,500–3,000 crore a year. That is proof a state can and does unilaterally raise fuel taxation for real, meaningful revenue — but it was a change to Karnataka's own petrol VAT, a tax entirely within state control under Article 246 (petroleum products are explicitly outside GST), decided in a state budget, not a GST Council vote.

Ethanol's SGST rate is a fundamentally different lever. Ethanol sits inside GST, so its rate (currently 5%, split 2.5/2.5) is a GST Council decision requiring the same 3/4 weighted-majority vote — states two-thirds, Centre one-third — that an earlier structural-fix piece flagged as the real obstacle to any GST-side change on ethanol. No individual state, however large its petrol market, can raise the ethanol SGST split on its own the way Karnataka raised its petrol VAT. Karnataka's hike is useful evidence that fuel taxation is politically viable to raise when a state controls the lever directly — it is not evidence that the GST Council would agree to reweight the CGST:SGST split specifically for ethanol, which needs national consensus, not a single state budget.

Related on this blog

See also, the full ethanol-SGST series: State-by-State: Who Actually Earns From Ethanol Blending? · A Tax Play: Grow Ethanol SGST Revenue, Cut CNG VAT to Match Low-Tax States · Ethanol Blending, OMC Books: E20 Today vs. E30 · India's Ethanol Surplus Isn't Going to Brazil or the USA · The Ethanol Sector's Buyers' Market

And the GST/devolution series this piece connects to: Who Collects India's GST, and Who Actually Gets It Back · Would More SGST Fix the "Donor State" Problem?

Sources

• PPAC (Petroleum Planning & Analysis Cell, Ministry of Petroleum & Natural Gas), state-wise petroleum product consumption, "Statewise Sales (POL) Consumption," FY2024-25 (latest full year)
• This blog's own state-by-state ethanol SGST model, whose per-state ethanol volumes and national totals this piece independently reproduced and extended
• ThePrint, Deccan Herald, and related coverage of Karnataka's June 2024 petrol/diesel VAT hike (25.92%→29.84% petrol, 14.34%→18.44% diesel), expected additional revenue ₹2,500–3,000 crore/year

All figures in this piece are a model built on public PPAC consumption data and stated, editable assumptions (0.74 kg/L petrol density, ₹60/litre ethanol price, current national E20 blend) — not official state treasury or GST Council figures. No state finance department publishes a state-wise, rate-wise breakdown of actual SGST collected specifically on ethanol; this analysis is a proxy built for illustration, consistent with the companion pieces' own stated limitations. Rate scenarios above 5% (7.5%, 10%, 12.5%, 15%) are this piece's own extension of the companion piece's 1–5% model and are not proposed, enacted, or under active GST Council discussion at any of these specific levels as far as this piece could determine.

About this article: Researched, written and edited by Umashankar Triplicane Dwarakanathan, with AI research assistance; every figure is meant to trace to the primary source cited. See the Editorial Policy for how sourcing, AI use and corrections work.