Govt hikes windfall tax on petrol, cuts levy on diesel, ATF exports from July 1; no change in domestic fuel tax
In a major development, the export duties have been reset at Rs 4/litre for petrol, Rs 8.5/litre for diesel and Rs 7.5/litre for ATF from 1 July 2026, with new exemptions for Mauritius and Maldives,
Govt HIKES windfall tax on petrol, cuts levy on diesel, ATF exports from July 1; no change in domestic fuel tax(Photo Credit: Representational/ANI)
In a significant update, the government on Tuesday hiked the windfall gains tax on petrol exports, while lowering the levy on diesel and ATF, for the fortnight beginning July 1, 2026. Accordingly, the rate of special additional excise duty (SAED) on the export of diesel will be Rs 8.5 per litre from the existing Rs 14/litre. Similarily, SAED on export of ATF will be Rs 7.5/litre, down from Rs 12.5/litre at present.
Why has the government hiked the windfall tax on petrol exports from July 1?
However, the duty on exports of petrol has been hiked to Rs 4/litre, up from the existing Rs. 1.5 per litre. According to the notification by the Finance Ministry, the duty hikes will come in effect from July 1, 2026.
Amid escalating tensions in West Asia, the government had on March 27 imposed an export duty on diesel and ATF and revised the rate every fortnight. Beginning May 16, an export duty was levied on petrol.
At the time of imposition of the export levy in March, exemption was provided for exports of petrol, diesel and ATF made by Public Sector Oil Companies to Nepal, Bhutan, Bangladesh and Sri Lanka. The said exemption has now been extended to exports made by Public Sector Oil Companies to Mauritius and Maldives also, the finance ministry said.
How much is the new Special Additional Excise Duty (SAED) on diesel exports?
In a press release, the Finance Ministry said, "In exercise of the powers conferred by Section 5A of the Central Excise Act, 1944(1 of 1944) read with Section 147 of Finance Act, 2002 (20 of 2002), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 06/2026-Central Excise, dated the 26th March, 2026, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 205(E), dated the 26th March, 2026, namely: In the said notification, in the Table, (i) against serial number 1, in column (4), for the entry, the entry "Rs. 4 per litre" shall be substituted; (ii) against serial number 2, in column (4), for the entry, the entry "Rs. 8.5 per litre" shall be substituted."
"This notification shall come into force with effect from 1st July, 2026," the notification added. The ministry also said that there is no change in the existing duty rates on petrol and diesel cleared for domestic consumption. The windfall tax was levied to increase domestic availability of the fuel amid the war in West Asia.
Govt to lift curbs on petrol, diesel sales to commercial buyers from Jul 1
Meanwhile, from July 1, the government will lift restrictions on the sale of petrol and diesel to commercial and industrial consumers. This move is aimed at easing emergency measures imposed to manage fuel supplies. The move will also end the cap on the diesel quantity that can be sold to a single vehicle in a day at retail fuel stations, reflecting an improvement in the country's fuel supply situation.
In an order dated June 29, the Ministry of Petroleum and Natural Gas rescinded its June 12 directive that had capped diesel sales to a single vehicle at 200 litres a day and barred industrial, commercial and institutional consumers from purchasing petrol and diesel from retail fuel stations.
The restrictions had been introduced to prevent local fuel shortages amid global supply disruptions. "The temporary measures were considered necessary and expedient in the public interest to maintain supplies of motor spirit (petrol) and high speed diesel...and secure their equitable distribution and availability at fair prices," the June 29 order said, news agency PTI reported.
(With agencies inputs)
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