The Indian government has increased export duties on diesel and aviation turbine fuel (ATF) while removing the levy on petrol exports for the fortnight beginning October 31, 2026. Under the revised rates, the combined export levy on diesel has increased by ₹3 per litre to ₹11.50, while the duty on ATF has risen by 50 paise to ₹11 per litre. Petrol’s export levy has been reduced from ₹2.50 per litre to zero.
The changes were announced through Finance Ministry notifications on October 31 and took effect immediately. The government said the revisions apply to exported petroleum products and do not change the existing duty rates on petrol and diesel supplied for domestic consumption. The move comes amid continuing uncertainty over energy supplies and geopolitical tensions in West Asia.
Key Takeaways
- Diesel export levy increased from ₹8.50 to ₹11.50 per litre.
- ATF export duty increased from ₹10.50 to ₹11 per litre.
- Petrol export duty reduced from ₹2.50 per litre to zero.
- The revised rates took effect on October 31, 2026.
- The changes apply for the fortnight beginning October 31, subject to the next government review.
- Domestic petrol and diesel duty rates remain unchanged.
- The government reviews export levies every two weeks based on international fuel and crude oil prices.
- The policy aims to protect domestic fuel availability and moderate incentives for exporting petroleum products.
New Windfall Tax Rates on Petrol, Diesel and ATF
The Finance Ministry has revised the export duties on three major petroleum products.
The most significant increase is on diesel exports, where the combined special additional excise duty (SAED) and road and infrastructure cess has risen by ₹3 per litre.
ATF exports will face a smaller increase, while petrol exports will no longer attract the export levy during the current fortnight.
Revised petroleum export duty rates
| Petroleum product | Previous rate | New rate | Change |
|---|---|---|---|
| Petrol | ₹2.50/litre | Nil | Reduced by ₹2.50 |
| Diesel | ₹8.50/litre | ₹11.50/litre | Increased by ₹3 |
| ATF | ₹10.50/litre | ₹11/litre | Increased by ₹0.50 |
The diesel figure represents the combined SAED and road and infrastructure cess applicable to exports.
The revisions are effective from October 31, 2026. The government will review the rates again under its fortnightly mechanism.
Why Has the Government Increased Windfall Tax on Diesel and ATF?
The latest revision comes amid continuing uncertainty in international energy markets and geopolitical tensions in West Asia.
India is a major importer of crude oil, which is processed by domestic refineries into petrol, diesel, aviation fuel and other petroleum products.
When international fuel prices rise, exporting refined petroleum products can become more attractive for domestic refiners because overseas markets may offer better prices.
This can create a situation in which companies have stronger incentives to export fuel rather than sell it in the domestic market.
The government introduced export duties to address this concern.
The main objectives are:
- Maintain adequate domestic availability of petroleum products.
- Reduce incentives for unusually profitable exports.
- Manage differences between domestic and international fuel prices.
- Prevent domestic fuel supply from being affected by overseas market conditions.
The latest decision continues this policy, but the different rates indicate that the government is treating petrol, diesel and ATF exports differently.
Why Has Petrol’s Export Duty Been Reduced to Zero?
While diesel and ATF export levies have increased, the government has removed the ₹2.50-per-litre levy on petrol exports.
This means petrol exporters will no longer pay the additional export duty under the revised rate for the current fortnight.
The decision does not mean petrol has become exempt from all taxes. It specifically removes the export levy introduced under the current duty framework.
The change also does not directly reduce the retail price of petrol at Indian fuel stations.
The government has not provided a detailed product-by-product explanation for the latest adjustment. The fortnightly revision mechanism allows it to change individual fuel duties in response to movements in international crude and refined-product prices.
What Is a Windfall Tax?
A windfall tax is a special tax imposed on unusually high profits or gains earned by companies because of exceptional market conditions.
In the petroleum industry, refiners can benefit when international prices rise sharply and the difference between domestic and overseas selling prices becomes unusually large.
Governments may introduce additional taxes or export duties to capture part of these gains or discourage excessive exports.
India’s current petroleum export-duty framework was reintroduced in March 2026 amid the West Asia crisis.
The government initially imposed export duties on diesel and ATF on March 27. Petrol was brought under the export-duty framework from May 16.
The rates have since been revised every fortnight.
Importantly, the current duties are applied to petroleum products cleared for export. They should not be confused with the earlier windfall tax regime on domestically produced crude oil, which was withdrawn in December 2024.
How Will the New Tax Affect Indian Oil Companies?
The revised export duties could affect the economics of companies that refine and export petroleum products.
India has several large refining companies that supply fuel to domestic and international markets.
These include:
- Reliance Industries.
- Indian Oil Corporation.
- Bharat Petroleum Corporation.
- Hindustan Petroleum Corporation.
- Nayara Energy.
The impact will depend on each company’s export volumes, product mix, refinery economics and the difference between domestic and international selling prices.
1. Diesel exporters
The increase from ₹8.50 to ₹11.50 per litre raises the additional cost associated with exporting diesel.
Refiners may need to absorb some of this cost, reduce export margins or adjust the allocation of production between domestic and international customers.
2. ATF exporters
The ATF levy has increased by 50 paise per litre to ₹11.
The impact will depend on the volume of aviation fuel exported and the profitability of those shipments.
3. Petrol exporters
The removal of the ₹2.50-per-litre levy reduces the additional tax burden on petrol exports.
This could improve the economics of petrol exports relative to the previous fortnight, depending on international prices and other costs.
The actual financial impact on individual companies cannot be determined from the duty revision alone.
Will Petrol and Diesel Prices Fall in India?
The latest decision does not directly change petrol or diesel prices at domestic fuel stations.
The Finance Ministry has clarified that there is no change in the existing duty rates on petrol and diesel cleared for domestic consumption.
The revised levies apply to exports.
Therefore, consumers should not assume that petrol prices will fall because the export levy has been removed, or that domestic diesel prices will rise because its export duty has increased.
Retail fuel prices depend on several factors, including crude oil prices, refining costs, transportation, dealer commissions, central taxes and state-level VAT.
The export-duty changes primarily affect refiners’ decisions and the economics of selling petroleum products overseas.
How Does India’s Fortnightly Windfall Tax Review Work?
The government periodically reviews export duties to respond to changes in global energy prices.
The review takes into account average international prices of crude oil, petrol, diesel and ATF since the previous revision.
The duties may be imposed through special additional excise duty, road and infrastructure cess or a combination of the two, depending on the product and the relevant notification.
This mechanism allows the government to adjust export levies rather than maintaining a fixed rate throughout the year.
The latest changes are effective from October 31, and another revision could follow at the next scheduled review.
The Bigger Picture
India’s latest petroleum export-duty revision reflects the challenge of balancing domestic fuel availability with the commercial interests of refiners operating in global markets. Higher duties on diesel and ATF exports can reduce the financial incentive to send these products overseas, while removing the petrol levy gives petrol exporters a different cost structure. The policy also demonstrates how the government is using flexible, product-specific duties to respond to changing international energy conditions.
For oil companies, the impact will depend on export volumes, refining margins and the direction of global fuel prices. For consumers, the key distinction is that the latest changes apply to exports and do not directly alter domestic petrol and diesel duties. The next fortnightly review will provide another indication of how the government is responding to developments in the energy market.
Looking Ahead
Oil refiners and investors will monitor the next government review to see whether the higher diesel and ATF export levies remain in place or are adjusted again. International crude prices, refined fuel margins and developments in West Asia will remain important factors influencing future decisions.
For now, the revised rates create a different export-duty structure for the three fuels: petrol exports carry no additional levy, while diesel and ATF exports face higher duties. The effect on individual refiners will become clearer as companies report their export volumes and financial performance in subsequent quarters.
Frequently Asked Questions
1. What is India’s latest windfall tax on diesel exports?
The combined special additional excise duty and road and infrastructure cess on diesel exports has increased from ₹8.50 to ₹11.50 per litre, effective October 31, 2026.
2. What is the new export duty on ATF?
The export duty on aviation turbine fuel has increased from ₹10.50 to ₹11 per litre.
3. Has the petrol export duty been removed?
Yes. The petrol export levy has been reduced from ₹2.50 per litre to zero for the fortnight beginning October 31, 2026.
4. Will petrol prices fall in India because of this decision?
Not directly. The change applies to petrol exports and does not automatically reduce domestic petrol prices.
5. Will domestic diesel prices increase because the export duty has been raised?
No direct increase follows from this decision. The government has clarified that the existing duty rates on diesel cleared for domestic consumption remain unchanged.
6. Why does the government impose windfall tax on petroleum exports?
The government uses export duties to help maintain domestic fuel availability and reduce incentives for exporters to take advantage of unusually high international prices.
7. When did India introduce the latest petroleum export-duty framework?
The government imposed export duties on diesel and ATF on March 27, 2026. Petrol was brought under the framework from May 16, 2026.
8. How often does the government revise petroleum export duties?
The government reviews the rates every fortnight, taking into account international crude oil and refined petroleum product prices.
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