India Revises Windfall Tax on Fuel Exports: Petrol Duty Raised, Diesel and ATF Reduced

The government on Tuesday announced revisions to the windfall gains tax on exports of petrol, diesel, and aviation turbine fuel (ATF), effective from July 1. The changes aim to balance domestic fuel availability and global market conditions amid ongoing Middle East tensions.

Under the revised rates, the special additional excise duty (SAED) on diesel exports has been reduced to Rs 8.5 per litre from the current Rs 14 per litre. For ATF, the duty is lowered to Rs 7.5 per litre from Rs 12.5 per litre. Conversely, the export duty on petrol has been increased to Rs 4 per litre from Rs 1.5 per litre.

The adjustments come as part of a fortnightly review process. The windfall tax was first imposed in March 2024 on diesel and ATF exports, with petrol added later in May, to prevent exporters from profiting excessively from high global crude prices triggered by the Middle East crisis. The levy is intended to ensure sufficient domestic supply of petroleum products.

The Finance Ministry's notification also extended exemptions for exports by public sector oil companies. Initially, exemptions applied to exports to Nepal, Bhutan, Bangladesh, and Sri Lanka. Now, exports to Mauritius and Maldives are also exempt from the windfall tax.

Notably, there are no changes in the tax rates for petrol and diesel sold within the domestic market. The windfall tax applies only to exports, aimed at discouraging outward shipments during periods of global price volatility.

The government will continue to review the rates every fortnight based on international oil price trends and domestic supply conditions.