New Delhi: In a major relief to domestic oil refining companies, the central government has announced a significant cut in the windfall tax levied on the export of petrol, diesel, and aviation turbine fuel (ATF). The move is expected to boost the profit margins of Indian oil refiners and make it easier for them to sell fuel in international markets.
According to the official government order, the revised rates have been implemented with immediate effect. The export duty on petrol has been completely completely slashed to zero from the earlier Rs 3.5 per litre. Similarly, the tax on diesel exports has been reduced from Rs 25.5 per litre to Rs 24 per litre. The levy on ATF exports has also seen a downward revision, dropping from Rs 22 to Rs 19.5 per litre.
The reduction in windfall tax comes as a strategic boost for major oil refining companies such as Reliance Industries (RIL) and Nayara Energy. The government typically adjusts these taxes every fortnight based on global crude oil prices and fluctuating refining margins. This mechanism ensures that the export businesses of domestic refiners are not adversely affected and their net profits remain stable during periods of global market volatility.
However, consumers hoping for cheaper fuel at local petrol pumps will be disappointed. Since the windfall tax applies exclusively to the international export of fuel, the latest revision will have no direct impact on the retail prices of petrol and diesel in the domestic market.
The windfall tax was first introduced in July 2022 to prevent domestic oil producers and refiners from making abnormal profits. At that time, crude oil and petroleum product prices had hit record highs in the international market, allowing companies to earn massive windfalls through exports. The government levied the tax to curb these profits and ensure adequate domestic supply. Although the tax was withdrawn exactly two years later when market conditions normalised, it was reintroduced in March 2026 following another spike in global oil prices amidst the US Israel and Iran conflict.