Government Increases Windfall Tax on Petrol Exports, Reduces Diesel Export Tax to ₹8.5 Per Litre

The central government has altered the windfall gains tax applicable to petrol and diesel exports. Following the latest revision, the tax on petrol exports has increased to ₹2.5 per litre, while the tax on diesel exports has been reduced to ₹8.5 per litre, as per news reports.  

This change will come into effect on October 16, 2026, as confirmed by the central board of indirect taxes and customs (CBIC). 

Adjustments in Windfall Gains Tax Rates 

The government has increased the windfall tax on petrol exports, now set at ₹2.5 per litre, up from previous rates.  

Conversely, the windfall tax on diesel exports has seen a reduction, now standing at ₹8.5 per litre, down from the previous ₹16 per litre. This change does not affect aviation turbine fuel (ATF), which remains unchanged. 

Ongoing Geopolitical Factors 

These tax revisions occur amidst international tensions, notably the US-Iran and Russia-Ukraine conflicts, which have influenced freight and insurance rates and buoyed crude oil prices to approximately $95 per barrel. These global factors contribute to the decision-making process for local tax adjustments. 

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Regular Review Mechanism 

The windfall gains tax rates are subject to a fortnightly review based on the average crude oil prices over the preceding 15 days. This adjustment aims to align with fluctuating global markets while maintaining stable domestic economic policies. 

The current modification strictly pertains to exports, with no alteration in duties on petrol and diesel meant for domestic consumption.  

Conclusion 

Effective October 16, 2026, the government has updated windfall tax rates with petrol export tax rising to ₹2.5 per litre and diesel export tax falling to ₹8.5 per litre, amid geopolitical tensions and stable ATF tax. 

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