Government Cuts Windfall Tax on Petrol, Diesel and ATF Exports From June 1

The Centre has reduced the windfall tax on exports of petrol, diesel and aviation turbine fuel (ATF), offering relief to refiners amid sustained volatility in global energy markets triggered by the ongoing West Asia conflict.

In a notification issued by the Finance Ministry, the government said the revised export duties will come into effect from June 1 as part of its fortnightly review mechanism linked to international crude and fuel prices.

The special additional excise duty (SAED) on petrol exports has been cut by half to Rs 1.5 per litre from Rs 3 per litre. The levy on diesel exports has been reduced to Rs 13.5 per litre from Rs 16.5 per litre, while the duty on aviation turbine fuel (ATF) exports has been lowered sharply to Rs 9.5 per litre from Rs 16 per litre.

The ministry also said the road and infrastructure cess on petrol and diesel exports will remain nil. There is no change in the excise duty structure on petrol and diesel meant for domestic consumption , indicating that retail fuel prices are unlikely to be affected immediately by the latest revision.

The export duties were first imposed in March after crude oil prices surged following military strikes by the United States and Israel on Iran and Tehran’s subsequent retaliation, raising fears of supply disruptions across the region. The government introduced the levy to discourage excessive exports, prevent refiners from benefiting disproportionately from soaring international prices and ensure adequate fuel availability within India.

Export duties on diesel and ATF were initially fixed at Rs 21.5 per litre and Rs 29.5 per litre, respectively, on March 26. They sharply increased on April 11 to Rs 55.5 per litre on diesel and Rs 42 per litre on ATF as global crude prices climbed above USD 100 per barrel. The levies were subsequently reduced in reviews conducted on April 30 and May 16 as market conditions eased.

The latest revision marks the second consecutive reduction in export levies this month. On May 16, the government imposed a Rs 3 per litre windfall tax on petrol exports for the first time since the start of the conflict, while lowering duties on diesel and ATF exports. According to government notifications and industry reports, export duty rates are being reviewed every two weeks based on the average international prices of crude oil, petrol, diesel and ATF during the period since the previous assessment.