Windfall tax on petrol exports cut to 0 after early August hike; diesel duty down ₹1.5/litre, ATF by ₹2.5/litre

The central government has today slashed windfall gains tax on petrol, diesel and air turbine fuel (ATF) exports for the fortnight, weeks after hiking the rate amid escalating tensions due to the war in West Asia.

The special additional excise duty (SAED) has been cut for the fortnight beginning 15 August, as follows:

Why was windfall tax hiked on 3 August

On 3 August, the Centre hiked windfall gains tax on exports of petrol, diesel and ATF for the fortnight beginning the same day — SAED on export of diesel to ₹25.5 a litre, up from ₹15.5 a litre; and SAED on export of ATF to ₹22/litre, as against ₹14.5/litre earlier; while duty on petrol exports was raised to ₹3.5 per litre, from ₹2.5 per litre levied on July 16.

This came amid escalating tensions in West Asia and following the government’s move to impose an export duty on diesel and ATF on March 27 and revised the rate every fortnight. Beginning May 16, the levy was imposed on petrol exports.

At the time, the government cited supply disruptions caused by the effective closure of the Strait of Hormuz amid the conflict in West Asia. The measures were intended to shield Indian consumers from rising fuel prices while safeguarding domestic supplies. “The windfall tax was intended to ensure domestic availability of petroleum products by disincentivising exports amid the West Asia crises”, it said.

Why does India review windfall taxes every fortnight?

The Centre reviews windfall taxes on petroleum products every two weeks, adjusting the levies in response to movements in international crude prices, export margins and broader market conditions.

Windfall taxes are designed to capture extraordinary profits earned by refiners and producers when global energy prices surge. The policy also seeks to discourage excessive exports during periods of supply uncertainty and ensure sufficient fuel remains available for domestic consumption.

On 15 August (IST), Brent crude oil futures settled at $88.52 a barrel, up 1.67%. US futures finished at $82.40, up 1.42%.

(With inputs from Agencies)