Windfall Tax Cut: India Lowers Levies on Petrol, Diesel and ATF Exports

India has cut the windfall tax on exports of petrol, diesel and aviation turbine fuel (ATF), lowering the levies for the fortnight beginning September 16 as global oil markets remain volatile amid tensions in the Middle East. The petrol export levy has been reduced to INR 0.5 per litre from INR 1.5, while the total levy on diesel has been cut to INR 20 from INR 25 per litre. The ATF levy has been lowered to INR 15 from INR 19 per litre.

The revised rates are part of the government's fortnightly review of export duties on petroleum products, PTI reported. The levies are adjusted in response to international crude and refined fuel prices. The latest decision partly reverses the increase announced at the previous review on September 1. ITC Cigarette Price Hike: Classic Connect and Gold Flake Super Star Get Costlier; Check New Rates Here.

Windfall Tax Cut: New Export Levy Rates

Under the revised structure, the export duty on petrol is INR 0.5 per litre, comprising Special Additional Excise Duty (SAED), with no Road and Infrastructure Cess (RIC). The levy on diesel is now INR 20 per litre, entirely through SAED, while RIC has been reduced to nil.

For ATF, the export levy has been lowered to INR 15 per litre from INR 19 per litre. The duty is imposed through SAED. The changes took effect on September 16 and will remain in force for the current fortnight before the next scheduled review.

Why The Government Cut The Windfall Tax

The latest reduction comes amid sharp movements in global oil prices as markets assess the impact of supply disruptions and geopolitical tensions in the Middle East.

India has been revising petroleum export levies every two weeks since the duties were introduced in March 2026. The government has said the measures are intended to help maintain domestic availability of petroleum products while responding to changing international market conditions.

At the previous review on September 1, the total levy on diesel exports was raised to INR 25 per litre, while petrol and ATF export levies were set at INR 1.5 and INR 19 per litre, respectively. The latest move therefore represents a reduction of INR 1 per litre for petrol, INR 5 for diesel and INR 4 for ATF.

Global Oil Markets Remain Volatile

The tax revision comes as international crude markets continue to react to developments in the Middle East. Oil prices had risen sharply earlier in the week amid concerns over disruptions to supplies following attacks affecting Saudi Arabian oil infrastructure and wider risks involving Iran, the US and Israel.

However, prices subsequently eased as concerns over immediate supply shortages moderated. Brent crude futures were down around 1.2% at USD 104.59 a barrel in early trading on Thursday, while US West Texas Intermediate (WTI) crude fell about 1.1% to USD 101.29 a barrel. Both contracts had fallen by roughly USD 3 on Wednesday.

The decline followed reports that Saudi Arabia was offering additional crude cargoes to Asian refiners through ship-to-ship transfers near Oman's Sohar port, helping reduce some immediate supply concerns.

No Change In Domestic Petrol And Diesel Taxes

The reduction in export levies does not mean petrol or diesel taxes paid on fuel sold in India have been reduced.

There is no corresponding change in the existing excise duty rates on petrol and diesel cleared for domestic consumption. The latest measure applies specifically to petroleum products exported from India. As a result, the lower export levy does not directly mean cheaper petrol or diesel at Indian fuel stations.

Export Duties Introduced Amid West Asia Crisis

India introduced export levies on petroleum products from March 27, 2026, amid the West Asia crisis and concerns over international fuel prices and domestic availability. The government has subsequently revised the rates several times as market conditions changed.

The fortnightly review mechanism allows the government to adjust the tax burden based on movements in crude oil, petroleum product prices and refining margins. India is also a major exporter of refined petroleum products, making changes to export duties relevant to refiners and companies with significant overseas sales.

What The Oil Price Move Means For India

The direction of global crude prices remains closely linked to developments in the Middle East and the extent to which supply disruptions continue. A sustained rise in crude prices could increase India's import bill and affect refinery margins, while lower prices could ease some pressure on energy costs.

For now, the latest reduction in export levies reflects the government's response to changing international market conditions. The rates will be reviewed again as part of the next fortnightly assessment.

(The above story first appeared on LatestLY on Sep 17, 2026 09:10 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).