Centre slashes windfall tax on export of petrol, diesel and aviation turbine fuel 

The Central Government has slashed the windfall tax on the export of petrol, diesel, and aviation turbine fuel (ATF) with immediate effect, offering major relief to domestic refiners.

According to an official notification issued late Wednesday by the Finance Ministry, the revised rates took effect on September 16, 2026, as part of the government’s routine fortnightly review of export duties.

Under the revised levy structure, the export duty on diesel was reduced to ₹20 per litre from ₹25 per litre. The tax on ATF exports was lowered to ₹15 per litre from ₹19 per litre, while the levy on petrol exports was scaled back to ₹0.5 per litre from ₹1.5 per litre.

The adjustments were implemented through changes to the Special Additional Excise Duty (SAED) and relevant cesses. Meanwhile, the Ministry clarified that existing excise duty rates on petrol and diesel sold for domestic consumption remain unchanged.

The government periodically reviews windfall duties on crude oil production and fuel exports to balance domestic fuel availability against fluctuating global crude oil prices and refining margins. The latest reduction effectively eases tax burdens on fuel exporters after previous revisions aimed at securing domestic supplies and curbing supernormal profits during global market shifts.

Shifting dynamics in global crude markets have prompted the central government to roll back export levies on key fuels, bringing immediate relief to domestic refiners following a sharp surge in international prices.

Oil benchmarks snapped back today as supply bottleneck anxieties softened. Brent crude futures slipped 1.2% to $104.59 per barrel, while US West Texas Intermediate (WTI) fell 1.1% to $101.29 per barrel, following a $3 loss for both contracts on September 16.

The retreat came as Saudi Arabia began offering extra crude cargoes to Asian refiners via ship-to-ship transfers off Oman's Sohar port — easing fears triggered by earlier attacks on Saudi infrastructure, broader Middle East tensions involving Iran, the US, and Israel, and potential shipping blockages in the Strait of Hormuz.

Capitalising on this cooling trend, India’s routine fortnightly duty review reversed the steep hikes enacted on September 1. Under the updated structure, the government cut the export levy on diesel by ₹5 to ₹20 per litre, lowered aviation turbine fuel (ATF) by ₹4 to ₹15 per litre, and reduced petrol by ₹1 per litre to ₹0.5 per litre.

First introduced on March 27, 2026, amid escalating West Asian conflict to protect domestic inventory, these export duties remain tightly tied to international product margins. The regular fortnightly adjustments allow the government to continually calibrate the tax burden alongside fluctuating global prices.