Govt slashes windfall tax on petrol, diesel, aviation turbine fuel exports; key details

The government has halved the windfall gains tax on the export of petrol to ₹1.5 per litre, while reducing the levy on diesel to ₹13.5 per litre and aviation turbine fuel (ATF) to ₹9.5 per litre, effective from Monday, June 1.

In a notification, the finance ministry said the road and infrastructure cess will be nil on the export of petrol and diesel.

Also, there is no change in the existing duty rates on petrol and diesel cleared for domestic consumption.

The special additional excise duty (SAED) on petrol at ₹3 per litre was imposed on May 16, and the fortnightly review slashed it to ₹1.5 per litre from June 1.

The duty on export of diesel has been reduced to ₹13.5 per litre, compared to ₹16.5 per litre, and ATF to ₹9.5 per litre, from ₹16 per litre, from June 1.

“The rates are prescribed based on the average international prices of crude oil, petrol, diesel, and ATF prevailing during the period since the last review,” the notification read.

The government had, on March 26, imposed an export duty of ₹21.50 per litre on diesel, and ₹29.5 per litre on ATF.

In the review on April 11, the duties were hiked to ₹55.5 per litre and ₹42 per litre. In the April 30 review, they were cut to ₹23 per litre and ₹33 per litre, and further slashed to ₹16.5/litre and ₹16 per litre on May 16.

The windfall tax was levied to increase domestic availability of the fuel amid the US-Israel and Iran war.

It was also aimed at not allowing exporters to take undue advantage due to price differences, as globally crude oil prices had risen since the beginning of the war.

On February 28, the United States and Israel launched military strikes against Iran, triggering sweeping retaliation from Tehran.

Crude oil prices have remained above $100 per barrel over the past week, from about $73 per barrel before the war.

The windfall tax was to ensure domestic availability of petroleum products by disincentivising exports against the backdrop of the West Asia crisis, the ministry said.