Centre Hikes Windfall Tax on Diesel to Rs 11.5 and ATF to Rs 11 per Litre While Scrapping Petrol Levy

In its latest fortnightly revision of energy export duties, the Central Government has increased the windfall gains tax on overseas shipments of high-speed diesel and aviation turbine fuel (ATF), while completely eliminating the export levy on petrol with effect from October 31.

According to an official notification issued by the Ministry of Finance, the revised Special Additional Excise Duty (SAED) rates aim to align domestic fiscal policy with prevailing international fuel cracks while safeguarding domestic fuel availability amid ongoing volatility in global energy markets.

Key Changes in Fuel Export Levies:

• Diesel Exports: The SAED, along with the road and infrastructure cess on high-speed diesel exports, has been hiked by ₹3 per litre, rising from ₹8.5 per litre to ₹11.5 per litre.
• Aviation Turbine Fuel (ATF): The export duty on jet fuel shipments has been increased marginally by 50 paise, moving from ₹10.5 per litre to ₹11 per litre.
• Petrol Exports: The windfall tax on petrol exports has been slashed to nil, down from ₹2.5 per litre in the preceding fortnight.
• Domestic Fuel Duties: The Ministry confirmed that excise duty structures on petrol and diesel cleared for domestic retail consumption remain entirely unchanged.

Fortnightly Policy Context

The revision reverses part of the prior fortnightly adjustment made earlier in October, when the government had cut diesel export levies from ₹16 per litre to ₹8.5 per litre and raised the petrol export duty to ₹2.5 per litre. The export duty regime on diesel and ATF was reintroduced on March 27 amid escalating geopolitical tensions in West Asia that disrupted global supply chains and widened refining crack spreads, with petrol exports subsequently brought under the tax net on May 16.

The government reviews these duties every two weeks based on international benchmark margins. The primary objective of the windfall tax mechanism is to prevent private refiners from diverting supplies exclusively to premium international markets, thereby preserving supply security within India while capturing supernormal refining profits generated during global energy disruptions.

Market and Sectoral Implications

For equity markets and the energy sector, the bifurcated adjustment presents a mixed bag for major Indian refiners, primarily Reliance Industries Limited (RIL) and Nayara Energy, which operate export-oriented refining facilities.

While the elimination of the ₹2.5-per-litre duty on petrol provides immediate margin relief on motor spirit exports, the ₹3-per-litre increase on diesel shipments reinstates a heavier tax burden on India's single largest petroleum export product. Energy analysts track these fortnightly notifications closely, as changes in SAED directly affect the net blended gross refining margins (GRMs) of export-focused refiners.