The Windfall Tax on petroleum exports has been reduced by the Centre, with lower export duties announced on petrol, diesel and aviation turbine fuel (ATF) exported from India. The latest revision applies only to petroleum products shipped overseas, while the excise duty on petrol and diesel sold in the domestic market remains unchanged.
Key Highlights
- Centre cuts windfall tax and export duties on petrol, diesel and aviation turbine fuel exported from India.
- Domestic petrol and diesel excise duties remain unchanged despite the latest petroleum export duty revisions.
What Has the Government Changed?
The Finance Ministry has revised the export levies on key petroleum products. The latest rates are:
|
Petroleum Product |
Revised Export Duty |
Charge |
|---|---|---|
|
Petrol |
Rs 0.5 per litre |
SAED |
|
Diesel |
Rs 20 per litre |
SAED |
|
ATF |
Rs 15 per litre |
SAED |
For petrol exports, the duty has been reduced to Rs 0.5 per litre, entirely charged as Special Additional Excise Duty (SAED). The Revenue Integration Charge (RIC) remains nil.
The export duty on diesel has been lowered to Rs 20 per litre through SAED, while RIC continues to remain zero. For ATF, the export levy has been reduced to Rs 15 per litre through SAED.
Will Petrol and Diesel Prices Fall?
The latest decision concerns petroleum exports and does not reduce the central excise duty on petrol and diesel sold for domestic consumption.
Therefore, the revised export duties should not be viewed as a direct reduction in petrol or diesel prices at Indian fuel stations.
Domestic fuel prices are influenced by factors including international crude oil prices, the rupee-dollar exchange rate, taxes and pricing decisions taken by oil marketing companies.
Why Does the Government Review Windfall Tax?
India reviews windfall tax and petroleum export duties every two weeks. Global crude oil prices and refinery margins are among the key factors considered during these reviews.
Windfall taxes are generally imposed when petroleum producers or refiners earn unusually high gains due to favourable market conditions. Changes in the levy allow the government to adjust the tax burden as market conditions evolve.
The latest revision comes amid continued sensitivity in international oil markets to geopolitical developments and supply conditions.
How Have Petroleum Export Duties Changed Recently?
Petroleum export duties have been modified a number of times in recent months.
In the earlier revision (1st September 2021), the government reduced the diesel export levy from Rs 3 per litre to Rs 1 per litre. Meanwhile, the windfall tax on export of diesel was lowered from Rs 24 per litre to Rs 19 per litre.
In August, the government had increased the petrol export duty from Rs 2.5 per litre to Rs 3.5 per litre. The duty on diesel has been raised from Rs 15.5 per litre to Rs 25.5 per litre and the ATF duty has also been raised from Rs 14.5 per litre to Rs 22.0 per litre.
The latest notification represents another adjustment to petroleum export duties in response to changing market conditions.
Also Read: Govt Waives Excise Duty on E22-E30 Petrol Blends to Boost Ethanol Use
What Does the Windfall Tax Cut Mean for Oil Exporters?
The lower export duties will lead to lower tax liability for companies exporting petrol, diesel and ATF from India. But determinants in the international price, refinery margins, export volumes and other operating costs will have an impact on the refiners.
Indian refiners supply to both domestic and international markets, so the domestic economy of sale of refined petroleum products into overseas markets will be affected by changes in export duty.
The rate/periodicity can also be changed as per fortnightly review by government based on crude prices and refinery margins in the world market.
