India Cuts Windfall Tax on Diesel, ATF Exports, Raises Petrol Export Duty From Today

India has revised its windfall tax structure on petroleum product exports, reducing export duties on diesel and aviation turbine fuel (ATF) while increasing the levy on petrol exports. The revised rates, which came into effect on July 1, reflect the government's response to easing global crude oil prices and improving supply conditions. 

The move is aimed at balancing export competitiveness with the need to ensure adequate domestic fuel availability.

Government Revises Export Duties on Fuel

According to a government notification, the export duty on diesel has been reduced to ₹8.5 per litre from ₹14 per litre, while the levy on aviation turbine fuel (ATF) has been lowered to ₹7.5 per litre from ₹12.5 per litre.

In contrast, the export duty on petrol has been increased to ₹4 per litre from ₹1.5 per litre. The higher levy is intended to discourage excessive exports and ensure sufficient domestic supplies amid fluctuating fuel demand.

The revised duties became effective from July 1.

Softer Oil Prices Drive Policy Change

The latest revision comes as international crude oil prices have retreated significantly from recent highs. Brent crude had surged above $126 per barrel during heightened geopolitical tensions but has since declined as concerns over supply disruptions eased.

Improved shipping flows through the Strait of Hormuz and reduced geopolitical risks have helped stabilize global energy markets. Economists and market analysts now expect Brent crude to average $84.50 per barrel in 2026, lower than the previous forecast of $90.44 per barrel, reducing pressure on oil-importing countries such as India.

Export Exemptions Expanded

Alongside the duty revisions, the government has expanded export duty exemptions for public sector oil marketing companies.

Earlier, exports of petrol, diesel, and ATF to Nepal, Bhutan, Bangladesh, and Sri Lanka were exempt from the windfall levy. The latest order extends the same exemption to exports destined for Mauritius and Maldives, strengthening India's energy cooperation with neighboring and strategic partner nations.

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Conclusion

India's latest revision of windfall taxes reflects a calibrated approach to changing global oil market dynamics. By lowering duties on diesel and ATF exports while increasing the levy on petrol, the government aims to support exports where feasible without compromising domestic fuel availability. The expanded exemptions for select neighboring countries also reinforce India's broader regional energy engagement strategy.

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