The Government of India has reduced the windfall gains tax on fuel exports following a periodic review of international energy prices. The revised rates came into effect on June 1 and are expected to provide some relief to fuel exporters amid changing global market conditions.
Under the new rates, the windfall tax on petrol exports has been reduced by 50%, from INR 3 per litre to INR 1.5 per litre. Similarly, the tax on diesel exports has been lowered from INR 16.5 per litre to INR 13.5 per litre, reducing the burden on exporters of refined petroleum products.
The windfall gains tax on aviation turbine fuel (ATF) exports has also been significantly reduced. The rate has been cut from INR 16 per litre to INR 9.5 per litre, reflecting changes in international fuel prices and export market conditions.
The Ministry of Finance clarified that there is no change in the existing excise duty rates on petrol and diesel meant for domestic consumption. Therefore, the revised export tax rates will not directly affect domestic fuel taxation or retail fuel duties.
Windfall tax rates are reviewed every fortnight based on average international prices of crude oil, petrol, diesel, and ATF. The previous revision was implemented on May 16, 2026. The mechanism is designed to capture extraordinary profits earned by exporters when global fuel prices rise substantially above domestic levels.
The latest reduction comes amid heightened volatility in global oil markets following tensions linked to the US-Iran conflict and supply concerns around the Strait of Hormuz. Rising crude oil prices have increased pressure on energy markets worldwide, prompting regular adjustments to India’s windfall tax structure.