Govt Raises Petrol Export Windfall Tax To Rs 2.5/Litre, Cuts Diesel Levy To Rs 8.5 From October 16

The government has increased the windfall tax on petrol exports to Rs 2.5 per litre from Rs 0.5 per litre while also reducing the export levy on diesel to Rs 8.5 per litre from Rs 16 per litre, effective today, October 16 as per the announcement made by the Central Board of Indirect Taxes and Customs (CBIC).

However, the windfall tax on aviation turbine fuel (ATF) is kept unchanged at Rs 10.5 per litre.

Petrol, Diesel And ATF Export Duty Rates From October 16

The latest revision will have a change in the export duties applicable to petrol and diesel. While the levy on petrol exports has increased fivefold, the duty on diesel exports has been reduced by Rs 7.5 per litre.

The diesel export levy has been cut by approximately 47% from the previous rate of Rs 16 per litre. On the other hand, the petrol export duty has increased by Rs 2 per litre from its earlier level of Rs 0.5 per litre.

The export duty on ATF unchanged

Under the previous revision effective October 1, the government had reduced the diesel export levy to Rs 16 per litre from Rs 20 per litre, lowered the ATF levy to Rs 10.5 per litre and retained the petrol export duty at Rs 0.5 per litre.
It should be noted that the latest changes apply to export duties and do not change the existing duty rates on petrol and diesel cleared for domestic consumption. Therefore, the revision does not directly affect retail petrol and diesel prices at fuel stations.

Diesel Export Duty Falls From August Peak

On July 1, the diesel export levy was reduced to Rs 8.5 per litre from Rs 14 per litre. However, the duty subsequently increased through July and reached Rs 25.5 per litre in the August 3 revision. The latest cut to Rs 8.5 per litre brings the levy back to its July 1 level with a reduction of approximately 67% from the August peak.

Will Petrol And Diesel Prices Change In India?

The windfall tax revision does not directly change retail petrol and diesel prices in India because the revised levies apply to exports.

Petrol and diesel sold in the domestic market will be as per to their existing applicable tax and duty structure. So consumers should not take the increase in petrol export duty or the reduction in diesel export duty as an immediate change in fuel prices at petrol pumps.