Govt Doubles Down on Fuel Export Taxes but Curtails Windfall Profits
The Indian government slashed windfall gains tax for petrol exports to ₹1.5 per litre, lowering export taxes on diesel and ATF to support domestic fuel availability amid global oil price fluctuations.
Highlights
- •Reduced Windfall Gains Tax on Petrol Exports
- •Lowered Diesel and ATF Export Taxes
- •No Change in Domestic Fuel Duties
- •Price Discrepancies During Global Crude Oil Price Hike
On June 1, the Indian government halved the windfall gains tax on export of petrol to ₹1.5 per litre. Meanwhile, it reduced taxes on diesel to ₹13.5 and aviation turbine fuel to ₹9.5 per litre effective immediately.
The move targets exporters to prevent them from taking advantage of price discrepancies globally, particularly due to the rise in crude oil prices following skirmishes between Iran, Israel, and the United States. The government did not change domestic consumption rates or duty levies on petrol and diesel as they remained at existing levels.
Government Reviews and Adjustments
The special additional excise duty (SAED) on petrol was cut from ₹3 per litre in May to ₹1.5 per litre starting June 1, the finance ministry's latest notification reveals. In March, a windfall tax of ₹21.50 and ₹29.5 were imposed on diesel and aviation turbine fuel, respectively.
The rates underwent multiple reviews throughout April: they were raised to ₹55.5 per litre for diesel and ₹42 per litre for ATF (Aviation Turbine Fuel). After April 30, duties saw a reduction to ₹23 per litre for both fuels before reaching their current levels on May 16.
The winds of change were set in motion by the United States-Isreal strikes against Iran on February 28. Crude oil prices surged above $100 per barrel, reflecting a marked increase from around $73 per barrel pre-conflict.
