India Cuts Windfall Tax on Fuel Exports, Petrol Duty Now Zero

The Indian government has significantly cut windfall taxes on exports of petrol, diesel, and aviation turbine fuel (ATF), with these revised rates taking effect from August 15. This adjustment includes the complete removal of the export duty on petrol.

Revised Export Duty Rates

The new directives specify distinct reductions across various fuel types. Exporters will see the levy on petrol completely eliminated, moving from its previous rate of Rs 3.5 per litre to zero. For diesel, the export duty has been lowered from Rs 25.5 per litre to Rs 24 per litre, and for ATF, the levy decreased from Rs 22 per litre to Rs 19.5 per litre.

These adjustments are an integral part of India’s established bi-weekly review process for export levies on petroleum products. The government meticulously considers fluctuations in international crude oil and refined fuel prices when determining these rates, enabling a responsive policy framework.

Policy Evolution and Market Dynamics

Windfall taxes were initially introduced in July 2022 to capture unforeseen profits from high global energy prices. They were subsequently removed in 2024, only to be reintroduced in March 2026. This reintroduction followed a significant surge in crude prices, notably during the US-Israeli war on Iran.

The current reduction aims to ease the tax burden on fuel exports for the ongoing fortnight, providing relief to exporters. Further revisions are anticipated as part of the government’s regular review cycle, reflecting its adaptive stance towards global energy price movements.