Fuel tax credits are neither strictly "GST-free" (a sale type) nor "BAS excluded" (non-reportable); they are a separate credit claimed on the Business Activity Statement (BAS) at labels 7C and 7D. They represent a refund of excise duty paid on fuel used in business activities, not a GST adjustment.
“GST-free” is different: the sale is reportable on your BAS at 0% GST (not excluded). Common BAS Excluded items include wages, super, bank transfers, owner drawings, income tax payments, fines, donations, and certain government charges.
The United States federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. Proceeds from the tax partly support the Highway Trust Fund.
If your business receives fuel tax credits, you can record the amount using a journal entry. The journal entry would involve two accounts: A 4-XXXX or 8-XXXX Income account which would be credited. This increases income which amounts to decreasing expense.
GST-free items don't have GST added to their price, but still have to be reported on your BAS. In other words, even though you're not charging the 10% tax to your customers, these sales are part of your BAS reporting, helping you avoid ATO penalties and ensure your GST credits are calculated correctly.
Your business may need to complete business activity statements (BAS) to report on taxes and make payments. Your BAS helps you to report on taxes like: goods and services tax (GST) pay as you go (PAYG) withholding.
In your BAS you will need to know the sales for the period, the GST collected, the GST you paid on expenses, wages paid to staff and the tax withheld from wages (PAYG Withholding). If you're in the PAYG Instalment system, this field will already be completed.
You pay a federal tax on every gallon of fuel you purchase, and IRS Form 4136 allows you to claim a credit for the federal taxes you pay on fuel for certain untaxed purposes.
Is there GST on petrol? No, there is currently no GST on petrol in India. Petrol is subject to state and central government taxes instead of being included under the GST regime. This exclusion results in varying petrol prices across different states due to state-specific VAT and central excise duties.
Fuel tax credits are also business income so include them in your tax return at 'Assessable Government industry payments'.
Goods and services tax (GST)
Fuel is also taxable under the GST with the GST charged on the excise inclusive price of the fuel. GST registered businesses can claim an input tax credit for the GST on the excise inclusive price in their BAS.
Fuel Expense Category
Category: It's typically categorized under Fuel Expense, Gasoline Expense, or included within a broader Auto Expenses or Vehicle Expenses category, along with maintenance, insurance, etc. IRS Publication 463 lists "Gas" as a deductible actual car expense.
Liability of fuel and power ― the basics
The default position is that a supply of fuel and power will be liable to VAT at the standard-rate.
The primary allowances for most individuals are BAS and BAH, which are tax-exempt.
Excluding GST from GST-free sales
Most basic foods. Some education courses, course materials and related excursions or field trips. Some medical, health and care services. Some medicines.
GST credits are claimed by reporting them in your Business Activity Statement (BAS), which is usually lodged quarterly or monthly. Each BAS period allows you to report the GST you collected on sales and the GST paid on purchases. The difference is either paid to the ATO or refunded to you.
GST/HST. The 5% Goods and Services Tax (GST) is a federal tax added to the cost of fuel. Sales tax is added after all other taxes are applied, resulting in a “tax-on-tax,” because you pay taxes on the price of fuel and all the other per-litre taxes governments add to the price.
1. Non-GST Supply. Examples: Electricity, Diesel, Petrol and Alcohol for human consumption are some examples of Non GST supplies.
List of exempted goods under GST in India:
The IRS may ask you later for proof, such as receipts of the actual costs you paid for each fuel type. Don't include any receipts or explanation with your tax return. Instead, maintain them with your books and records for your tax return.
You can claim running costs such as fuel, oil and servicing, registration, insurance, and the decline in value. You can't claim capital costs, such as the purchase price of your car, the principal of a loan to buy it, or any improvement costs (for example, adding tinted windows).
The basic rules as of 2025/26 say you can claim back:
45p per mile for the first 10,000 miles you travel for work in a year. After that, the rate drops to 25p.
Items not reported on the BAS for GST purposes
Key items exempted from GST:
Prepared foods and snacks: Vegetable trays, pre-made meals, salads, sandwiches, chips, candy, granola bars, etc. Dining: Restaurant meals (dine-in, takeout, or delivery). Beverages: Beer, wine, cider, and sake.
A BAS is a form issued by the Australian Tax Office (ATO) to businesses that are registered for Goods and Services Tax (GST). It reports the GST a business needs to remit to the ATO, other business tax obligations, and pay as you go instalments on a periodic basis.