Government reintroduces windfall tax on fuel exports
What's the story
The Indian government has reintroduced windfall tax rates on fuel exports, effective from June 1, 2026. The new taxes are applicable on diesel and aviation turbine fuel (ATF) after a period of nil levies. Petrol exports will also be taxed under the revised scheme. The changes are in line with fluctuations in global oil prices and refiner margins.
Tax details
Revised duties on petrol, diesel, and ATF exports
According to an official notification, the duty on petrol exports has been fixed at ₹1.5 per liter as a Special Additional Excise Duty (SAED). There is no Road and Infrastructure Cess (RIC) applicable. Diesel exports will now attract a duty of ₹13.5 per liter, entirely as SAED, while ATF exports will incur an SAED of ₹9.5 per liter.
Domestic impact
Excise duties on fuels sold domestically remain unchanged
The government has clarified that there is no change in the existing excise duty rates on petrol and diesel sold in the domestic market. The revised tax rates will be reviewed every fortnight based on average oil prices over the last two weeks. This move is aimed at keeping a check on fluctuations in global oil prices and their impact on local markets.
Tax evolution
Windfall tax 1st introduced in July 2022
India first imposed a windfall tax on oil refiners and producers' exports in July 2022. The levies were announced for petrol, diesel, and domestically produced crude oil. Later, the government extended the levy to include ATF as well. The move was prompted by private refiners' attempts to export fuel instead of selling it locally due to strong refining margins.
Tax basis
Windfall tax on fuel exports saw major fluctuations
The windfall tax on fuel exports is determined by the margins refiners make on overseas shipments. This is mainly the difference between the international oil price realized and its cost. The levy has seen major fluctuations in the last year, with SAED on diesel, petrol, and ATF exports being nil as recently as May 2025 due to softer global crude prices at that time.