Govt cuts windfall tax on petrol, diesel, ATF exports amid oil price volatility
The government has cut the windfall tax on exports of petrol, diesel and aviation turbine fuel (ATF), lowering the levies imposed on petroleum product exports amid heightened volatility in global oil markets.
The revised rates came into effect from September 16 and will remain applicable for the next fortnight, as the government reviews export duties on petroleum products every two weeks based on international crude and fuel prices.
The levy on petrol exports has been cut to Rs 0.5 per litre from Rs 1.5 per litre, while the total levy on diesel exports has been reduced to Rs 20 per litre from Rs 25 per litre. The export duty on ATF has been lowered to Rs 15 per litre from Rs 19 per litre.
For diesel, the earlier Rs 25-per-litre levy comprised Rs 24 per litre of Special Additional Excise Duty (SAED) and Rs 1 per litre of Road and Infrastructure Cess (RIC). Under the new rates, SAED has been reduced to Rs 20 per litre and RIC has been brought down to nil.
The latest tax revision comes at a time when global oil markets have been dealing with heightened concerns over supply disruptions in the Middle East.
Crude prices had climbed sharply earlier this week as attacks on Saudi Arabian oil infrastructure and disruptions to crude flows added to concerns over global supplies. The situation has also been complicated by tensions involving Iran, the US and Israel and disruption risks around the Strait of Hormuz.
The latest move in oil markets, however, has been in the opposite direction.
Brent crude futures were down around 1.2% at $104.59 a barrel in early trading on Thursday, while US West Texas Intermediate (WTI) crude fell 1.1% to $101.29 a barrel. Both contracts had dropped by about $3 on Wednesday.
The easing came after reports that Saudi Arabia was offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman's Sohar port, reducing concerns about the immediate impact of supply disruptions.
The oil market therefore remains highly sensitive to developments in the Middle East, with supply disruptions and efforts to restore crude flows driving sharp price movements.WHY DID THE GOVERNMENT CUT THE WINDfall TAX?
India reviews the export levies every fortnight, with the rates linked to movements in international crude and petroleum product prices as well as refinery margins.
The latest revision reverses part of the increase announced at the previous review on September 1.
At that time, the government had raised the total export levy on diesel to Rs 25 per litre and set the levies on petrol and ATF at Rs 1.5 per litre and Rs 19 per litre, respectively.
The latest reduction means the petrol levy has fallen by Rs 1 per litre, the diesel levy by Rs 5 and the ATF levy by Rs 4.
The export levies on petroleum products were introduced from March 27, 2026, amid the West Asia crisis, with the government seeking to discourage exports and ensure adequate domestic availability of petroleum products.
The fortnightly changes allow the government to adjust the tax burden as global oil and refined product prices change.NO CHANGE IN DOMESTIC PETROL, DIESEL TAX
The latest reduction should not be confused with a cut in the tax paid on petrol or diesel sold in India.
There is no change in the existing excise duty rates on petrol and diesel cleared for domestic consumption, according to the latest government-linked data and reports on the notification.
This means the reduction in export levies does not directly translate into cheaper petrol or diesel for consumers at Indian fuel stations.
India is a significant exporter of refined petroleum products, making the export-duty framework important for refiners and oil companies with overseas sales. Petroleum exports accounted for 22.9% of India's petroleum, oil and lubricants production and 10.8% of gross exports in June 2026, according to PPAC data cited in recent reports.
The immediate direction of global oil prices will depend heavily on whether Middle East supply disruptions persist or ease further.
For now, prices have pulled back from the week's highs as Saudi Arabia's additional crude shipments have reduced some concerns over supply. But regional tensions remain elevated, with Saudi Arabia continuing military action in Yemen and facing retaliatory drone and missile attacks from the Iran-backed Houthi movement, Reuters reported.
For India, the developments matter because higher international crude and refined fuel prices can affect the country's import bill, refinery margins and the government's fortnightly decisions on export levies.- EndsPublished By: Sonu VivekPublished On: Sep 17, 2026 07:57 IST
