The government has reduced the windfall tax, or export levy, on petrol, diesel and aviation turbine fuel (ATF), offering some relief to oil companies exporting refined petroleum products. The revised rates came into effect from September 16 and will remain applicable for the next fortnight.
The reduction comes at a time when global crude oil prices remain volatile because of supply concerns linked to the ongoing conflict and tensions in West Asia. The government reviews these levies every two weeks, taking into account international crude prices, refined fuel prices and refinery margins.
Under the latest revision, the export levy on petrol has been reduced to ₹0.50 per litre from ₹1.50 per litre. The levy on diesel exports has been cut to ₹20 per litre from ₹25 per litre. The export duty on aviation turbine fuel has also been lowered to ₹15 per litre from ₹19 per litre.
The diesel levy has been reduced by ₹5 per litre. The earlier ₹25 levy consisted of ₹24 as Special Additional Excise Duty (SAED) and ₹1 as Road and Infrastructure Cess (RIC). Under the new structure, SAED on diesel exports is ₹20 per litre, while the RIC has been removed.
The petrol export levy, meanwhile, has fallen by ₹1 per litre. The entire ₹0.50-per-litre charge will be collected as SAED, with no Road and Infrastructure Cess.
The latest move partly reverses the increase announced during the previous fortnightly review on September 1. At that time, the government had raised the export levy on diesel to ₹25 per litre, while petrol and ATF attracted duties of ₹1.50 and ₹19 per litre, respectively.
The government adjusts the levies based on movements in international crude and refined petroleum product prices. Changes in refinery margins also play a role in determining the rates.
The export levies were introduced on March 27, 2026, amid the West Asia crisis. The objective was to discourage excessive exports and help maintain adequate availability of petroleum products in the domestic market.
The fortnightly review mechanism allows the government to respond relatively quickly when international oil prices change sharply. The latest reduction comes after crude prices rose significantly earlier in the week on concerns about disruptions to oil supplies in the Middle East.
Global oil prices have been moving sharply as markets assess the impact of disruptions to crude production and transportation in the region.
Brent crude futures were trading around $104.59 a barrel in early Thursday trading, down about 1.2%. US West Texas Intermediate (WTI) crude was around $101.29 a barrel, down about 1.1%. Both benchmarks had fallen by roughly $3 on Wednesday.
One factor behind the recent easing was news that Saudi Arabia was offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port. The development helped reduce some immediate concerns about supply shortages.
The broader oil market, however, remains sensitive to developments in West Asia. Disruptions to crude flows, attacks on energy infrastructure and risks around the Strait of Hormuz have kept traders alert.
Tensions involving Iran, the United States and Israel have added to uncertainty over future oil supplies. Any prolonged disruption could push crude prices higher again, affecting fuel costs, refinery margins and India’s import bill.
The reduction in the windfall tax should not be mistaken for a cut in the taxes paid on petrol and diesel sold within India.
There has been no change in the existing excise duty on petrol and diesel meant for domestic consumption. As a result, the latest reduction in export levies does not directly mean cheaper petrol or diesel at Indian fuel stations.
The change is mainly relevant to companies exporting refined petroleum products. India is a major exporter of products such as diesel, petrol and ATF, making the export levy an important factor 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.
Lower export duties reduce the tax burden on petroleum products shipped overseas. This could provide some relief to refiners at a time when global crude and refined product prices are moving sharply.
The impact will depend on how international oil prices and refining margins move over the next two weeks. If crude prices remain elevated because of supply disruptions, the government could reassess the levies at the next review.
The latest decision therefore reflects the changing conditions in the global oil market rather than a permanent change in India’s fuel-tax structure.
With the next fortnightly review approaching, refiners, exporters and investors will continue to track crude prices, refinery margins, geopolitical developments and fuel demand across major markets.
