The government has reduced the windfall tax on exports of diesel and aviation turbine fuel (ATF), giving fuel exporters some relief from the higher levies imposed during the West Asia crisis. The revised rates came into effect on October 1 and will apply for the next fortnight.
The special additional excise duty (SAED), along with the applicable road and infrastructure cess, on diesel exports has been reduced to ₹16 per litre from ₹20 per litre. The levy on ATF exports has been cut to ₹10.50 per litre from ₹15 per litre. The export duty on petrol remains unchanged at ₹0.50 per litre.
The latest move marks another reduction in fuel export duties as international crude oil and refined product prices change. The government reviews these levies every two weeks, allowing it to adjust the tax burden in line with global market conditions.
The previous revision came on September 16, when the diesel export duty was reduced to ₹20 per litre from ₹25 per litre. The ATF levy was also lowered at that time, falling to ₹15 per litre from ₹19 per litre.
The latest cut means the diesel export levy has now fallen by ₹9 per litre from the rate that applied before the September 16 review. The ATF levy has declined by ₹8.50 per litre over the same period.
The windfall tax has been an important part of the government’s response to sharp movements in global energy prices. India had reintroduced export duties on diesel and ATF in March 2026 as tensions in West Asia pushed crude oil prices higher. The levy was designed to protect domestic fuel availability and discourage refiners from sending larger volumes overseas when international prices offered stronger returns.
India had originally introduced windfall taxes on fuel exports in July 2022 when global energy prices surged. The earlier regime was withdrawn in 2024, before the government brought back export duties in 2026 amid renewed pressure in international oil markets.
The current system gives the government flexibility to respond to changes in crude oil prices, refined fuel margins and international demand. A lower export tax can improve the economics for Indian refiners selling diesel and jet fuel in overseas markets, while the government continues to monitor domestic supply.
The move is particularly relevant for India’s large refining companies, which have significant exposure to petroleum product exports. Reliance Industries and state-owned refiners Indian Oil, Bharat Petroleum and Hindustan Petroleum operate large refining capacities and participate in international fuel markets.
A lower windfall tax can reduce the amount paid to the government on every litre exported, potentially improving export margins when global prices are attractive. The actual benefit, however, will depend on crude prices, refining margins, freight costs, currency movements and demand in overseas markets.
The latest change applies only to exports. There has been no change in the existing excise duty rates on petrol and diesel cleared for domestic consumption, meaning the reduction in export taxes does not directly translate into a cut in petrol or diesel prices at Indian fuel stations.
The distinction is important because windfall tax and domestic fuel taxation operate separately. The latest notification concerns petroleum products being exported from India rather than fuel sold to consumers within the country. Domestic fuel prices continue to reflect their own pricing structure and market conditions.
There are also separate developments in the domestic fuel market from October 1. Aviation turbine fuel prices have increased by ₹16 per litre, while commercial LPG prices have also risen. These changes are separate from the reduction in export duties and do not mean that the lower ATF export tax has reduced the price of jet fuel for domestic airlines.
The ATF export levy is now ₹10.50 per litre, but domestic ATF prices are determined through the pricing framework followed by oil marketing companies and are influenced by international jet fuel prices and other market factors.
The government’s fortnightly review of the windfall tax means the rates could change again later in October. Any further adjustment will depend largely on the direction of international crude oil and petroleum product prices, along with developments in global energy markets.
The policy also remains important for government revenue and the refining sector. A higher levy can increase collections when export margins rise sharply, while a lower rate can leave refiners with greater flexibility in overseas markets. The balance can change quickly as global energy conditions shift.
Refiners and fuel exporters therefore remain closely exposed to international market movements. Changes in crude prices, product cracks, shipping costs and currency rates can influence the commercial impact of every tax revision.
The latest reduction provides some breathing room as refiners navigate volatile global conditions. The broader policy continues to balance two objectives: maintaining domestic petroleum supplies while allowing Indian refiners to remain competitive in international markets.
