The Indian government has revised the windfall tax on the export of petroleum products, increasing the levy on petrol while reducing it on diesel and aviation turbine fuel (ATF). The changes, announced by the Finance Ministry in a notification, will take effect from July 1, 2026.
Revised tax rates on petrol, diesel, and ATF
According to the notification, the windfall tax on petrol exports has been raised to Rs 6 per litre from the previous Rs 4 per litre, marking an increase of Rs 2 per litre. In contrast, the tax on diesel exports has been reduced to Rs 5 per litre from Rs 6 per litre, a decrease of Re 1 per litre. For aviation turbine fuel, the levy has been cut to Rs 3 per litre from Rs 4 per litre, also down by Re 1 per litre.
Background and impact
The windfall tax was first introduced in July 2022 to capture excess profits of oil producers and refiners amid high global crude oil prices. The government reviews the tax rates every fortnight based on international oil price trends. The latest revision comes as global crude prices have shown mixed movements, with petrol prices remaining elevated while diesel and ATF prices have softened.
The move is expected to affect domestic oil refiners and exporters. Higher tax on petrol exports may reduce profit margins for companies like Reliance Industries and Nayara Energy, which have significant export-oriented refineries. Conversely, the lower tax on diesel and ATF could provide some relief to exporters of these fuels.
Industry experts noted that the revision aligns with the government's aim to balance revenue generation with ensuring adequate domestic supply. “The government is fine-tuning the levy to reflect market realities. The reduction on diesel and ATF will likely support export competitiveness,” said an analyst.
