Government Slashes Windfall Tax on Petrol, Diesel, and ATF Exports

In a significant move offering relief to domestic oil refiners and exporters, the Indian government has announced a reduction in the windfall profit tax levied on the export of petrol, diesel, and aviation turbine fuel (ATF). This decision, aimed at aligning domestic taxation with evolving international crude oil market conditions, is expected to positively impact the profitability of energy companies.

Effective immediately, the levy on diesel exports has been adjusted downwards from ₹25 per litre to ₹20 per litre. Similarly, the tax on petrol exports now stands at ₹0.5 per litre, a notable decrease from the previous rate of ₹1.5 per litre. While specific revised figures for ATF were not detailed in the announcement, the export duty on aviation turbine fuel has also seen a reduction as part of this comprehensive policy revision.

This policy adjustment by the Finance Ministry comes amidst a backdrop of fluctuating global crude oil prices. The windfall profit tax, officially known as the Special Additional Excise Duty (SAED), was first introduced in July 2022. Its primary objective was to appropriate a portion of the supernormal profits earned by domestic crude producers and refiners, particularly when international oil prices surged past a certain threshold, leading to substantial margins for exporters.

The reduction is expected to provide significant relief to major Indian oil refiners and exporters, including private players like Reliance Industries and state-owned entities such as ONGC and Oil India. By lowering the tax burden, the government aims to enhance the competitiveness of Indian refined petroleum products in the international market, encouraging exports. The rates for this special additional excise duty are subject to fortnightly review, reflecting the government's adaptive approach to global energy market dynamics and ensuring responsiveness to market fluctuations.