Centre cuts fuel export windfall tax ahead of June review, lowers levy on diesel and aviation fuel

India cuts export duties on petrol, diesel and ATF as crude oil markets remain under pressure from Middle East tensions

May 31, 2026

Oil refinery infrastructure, fuel storage tanks and energy market activity reflecting India's decision to reduce export levies on petroleum products

Government reduces export duties on petrol, diesel and ATF as global oil markets remain volatile amid Middle East tensions

The Centre has announced a reduction in windfall taxes on fuel exports, lowering levies on petrol, diesel and aviation turbine fuel (ATF) effective June 1 as part of its fortnightly review of duties linked to global energy prices.

According to a notification issued by the Finance Ministry, the windfall gains tax on petrol exports has been halved from Rs 3 per litre to Rs 1.5 per litre. Export duties on diesel and aviation turbine fuel have also been reduced significantly.

The government has also removed the road and infrastructure cess on exported petrol and diesel, providing additional relief to fuel exporters.

Diesel and ATF duties reduced

Under the revised structure, the export duty on diesel has been lowered from Rs 16.5 per litre to Rs 13.5 per litre, while the levy on aviation turbine fuel has been cut from Rs 16 per litre to Rs 9.5 per litre.

However, there is no change in the duty structure applicable to petrol and diesel meant for domestic consumption.

The latest revision continues a trend of gradual reductions in export taxes after the government sharply increased duties earlier this year following the escalation of conflict in the Middle East.

Why the windfall tax was imposed

The Centre initially imposed the windfall tax to discourage excessive fuel exports and ensure adequate domestic supplies during a period of heightened geopolitical instability.

The decision came after military hostilities involving the United States, Israel and Iran triggered significant volatility in global energy markets.

Authorities were concerned that refiners and exporters could benefit disproportionately from soaring international fuel prices while domestic availability came under pressure.

Duty rates have seen multiple revisions

The government first imposed export duties of Rs 21.5 per litre on diesel and Rs 29.5 per litre on ATF in March. As global crude prices surged, the levies were sharply increased during subsequent reviews.

In April, duties were raised to Rs 55.5 per litre on diesel and Rs 42 per litre on ATF before being gradually reduced as market conditions stabilised.

The latest cuts mark another step in easing the burden on exporters while retaining mechanisms to safeguard domestic fuel availability.

Crude oil remains elevated

Global crude oil prices have remained above the USD 100 per barrel mark in recent days, significantly higher than levels seen before the outbreak of hostilities in the Middle East.

The government has maintained that the windfall tax framework serves as a balancing tool, ensuring that domestic consumers are protected from supply disruptions while preventing exporters from taking undue advantage of elevated global prices.

Officials are expected to continue reviewing the tax structure every fortnight in line with developments in international energy markets.

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