India Raises Diesel, Jet Fuel Export Tax Amid High Energy Prices; Will You Get Cheaper Petrol?

The Centre on Monday increased the windfall tax on exports of diesel and aviation turbine fuel (ATF) for a 15-day period starting June 16. However, there has been no change in the duty on exports of petrol. According to a notification issued by the Finance Ministry, the new rates will come into effect from June 16. Under the revised rates, the special additional excise duty on diesel exports has been increased from Rs 13.5 per lit to Rs 14 per litre. The duty on aviation turbine fuel exports has been increased from Rs 9.5 per litre to Rs 12.5 per litre.

Did The Petrol Prices Increase?

India did not make petrol cheaper, as the domestic excise duties on petrol and diesel for local consumers remain same, and petrol export duties stay at Rs1.5 per litre. Instead, the government increased the Special Additional Excise Duty (SAED) or windfall tax on diesel exports from Rs 13.5 to Rs 14 per litre, and on aviation fuel (ATF) from Rs 9.5 to Rs 12.5 per litre.

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The Centre further stated that there is no change in the existing excise duty rates on petrol and diesel cleared for domestic consumption, which means retail consumers are unlikely to see any immediate impact from the latest revision.

Why Were The Windfall Taxes Introduced?

The windfall tax regime was reintroduced on March 26 as the situation worsened in West Asia following the US-Israel attack on Iran and the retaliation. Since then, the Centre has been reviewing and revising the export duties regularly in accordance to the developments in international crude oil prices and refining margines. On May 16, it extended the levy to petrol exports as well.

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As per the officials, the export duties were imposed to ensure adequate domestic availability of petroleum products at a time when geopolitical tensions have pushed up global crude oil prices. The move is aimed at discouraging excessive exports by refiners seeking to capitalise on higher international prices, thereby safeguarding domestic fuel supplies.