New Delhi, May 31, 2026 : The Central Government has announced a reduction in the windfall gains tax imposed on the export of petroleum products, including petrol, diesel and aviation turbine fuel (ATF), with the revised rates set to take effect from June 1, 2026.
According to a notification issued by the Ministry of Finance, the special additional excise duty (SAED) on petrol exports has been reduced by 50 per cent, bringing the levy down from Rs 3 per litre to Rs 1.5 per litre.
The government has also lowered the windfall tax on diesel exports from Rs 16.5 per litre to Rs 13.5 per litre, while the duty on aviation turbine fuel exports has been reduced from Rs 16 per litre to Rs 9.5 per litre.
The notification further stated that the road and infrastructure cess on exported petrol and diesel will remain nil.
However, there has been no change in the existing excise duty structure applicable to petrol and diesel supplied for domestic consumption.
Series Of Revisions In Windfall Tax
The windfall tax regime has undergone several revisions since its introduction earlier this year amid escalating geopolitical tensions in West Asia.
The government had initially imposed an export duty of Rs 21.50 per litre on diesel and Rs 29.50 per litre on aviation turbine fuel on March 26.
Subsequently, during a review conducted on April 11, the export duties were significantly increased to Rs 55.50 per litre on diesel and Rs 42 per litre on ATF.
As international energy markets stabilised, the government gradually reduced the levy through successive reviews.
The April 30 review brought the duties down to Rs 23 per litre on diesel and Rs 33 per litre on ATF, while the May 16 revision further reduced them to Rs 16.50 per litre and Rs 16 per litre, respectively.
The latest revision effective June 1 marks another step in easing the tax burden on petroleum exports.
Why The Windfall Tax Was Introduced
The government introduced the windfall tax to ensure adequate domestic availability of petroleum products amid rising global crude oil prices triggered by conflict in West Asia.
Following military strikes launched by the United States and Israel against Iran on February 28 and the subsequent retaliation by Tehran, international crude oil markets experienced sharp volatility.
Crude oil prices, which were trading around USD 73 per barrel before the conflict, surged beyond USD 100 per barrel in the weeks that followed.
Officials said the levy was intended to discourage excessive exports of petroleum products and prevent exporters from benefiting disproportionately from widening international price differentials.
The measure was also aimed at safeguarding domestic fuel supplies during a period of uncertainty in global energy markets.
Focus On Energy Security
The Ministry noted that the windfall tax mechanism continues to serve as a tool for balancing domestic energy requirements while responding to fluctuations in global crude oil prices.
The latest reduction reflects evolving market conditions and the government’s ongoing review of petroleum export duties based on international price trends and domestic supply considerations.
Industry observers believe the reduction may provide some relief to refiners and exporters while maintaining safeguards for domestic fuel availability.
