India has re-implemented the tax on windfall profits on fuel exports. According to a government order issued on Thursday, a tax of Rs 21.5 per liter has been imposed on diesel and Rs 29.5 per liter on aviation turbine fuel (ATF). This step changes the earlier decision of the government in which it had removed such taxes.
The government is trying to rebalance revenues from the energy sector amid increasing turmoil in global oil markets. The new notification clarifies that this tax will be applicable on the export of diesel and ATF, which are important refined products and constitute a major part of India’s exported petroleum products.
India had abolished the windfall tax i.e. windfall tax in 2024, under which along with the production of crude oil, the duties on export of petrol, diesel and ATF were also removed. Re-imposition of this tax signals a new change in policy, as global crude oil prices are being affected due to international political tensions. This change comes with major changes in the country’s fuel tax structure, which also includes separate changes in excise duty on petrol and diesel.
Meaning of fuel duty cut
This tax has been re-implemented with major changes in the foot tax structure of India. The government has reduced the excise duty on petrol to Rs 3 per liter and completely abolished it on diesel, thereby changing the old tax system with immediate effect.
Earlier the tax on petrol was Rs 13 per liter and on diesel was Rs 10 per liter, which means there has been a reduction of Rs 10 per liter on both as compared to earlier. The new system reduces the tax burden on petrol and completely removes it on diesel, while it will not be applicable on fuel sent for export.
Naira had increased the prices
The move follows the recent price hike by private fuel seller Nayara Energy, which had increased the price of petrol by Rs 5 per liter and diesel by Rs 3 per litre, exposing cost pressures. Petroleum Minister Hardeep Singh Puri said that the government has cut taxes to compensate for the losses of oil companies amid the rise in global prices.
Also read- Government’s big decision on petrol and diesel, excise duty reduced by Rs 3 on petrol, direct cut of Rs 10 on diesel.