Government Hikes Windfall Tax on Petrol Exports; Slashes Levies on Diesel and ATF

New Delhi: The central government on Tuesday hiked the windfall tax on petrol exports, while reducing the levy on diesel and aviation turbine fuel (ATF) exports. The revised rates will come into effect from Wednesday (July 1). However, there is no change in the existing excise duty on petrol and diesel meant for domestic consumption.

The levy was also intended to discourage excessive exports and prevent refiners from benefiting disproportionately from higher international fuel prices during the ongoing regional crisis. With the reduction of levy on jet fuel or ATF, the air travels, however, is expected to be cheaper as flight tickets may come down to some extent.

Issuing a notification, the finance ministry also said that special additional excise duty (SAED) on petrol exports has been raised to Rs 4 per litre from Rs 1.5 per litre. "At the same time, the government reduced the SAED on diesel exports to Rs 8.5 per litre from Rs 14 per litre, while the levy on ATF exports has been lowered to Rs 7.5 per litre from Rs 12.5 per litre," it said.

The ministry, however, clarified that there is no change in the existing excise duty on petrol and diesel meant for domestic consumption, meaning retail fuel prices are unaffected by the latest revision. The government had first imposed the export levy on diesel and ATF on March 27 amid escalating tensions in West Asia, with the duty rates reviewed every fortnight. An export duty on petrol was introduced later, from May 16.

The export duties were introduced to ensure adequate domestic availability of petroleum products and prevent exporters from benefiting disproportionately from higher international fuel prices following the conflict in West Asia.

When the duties were initially imposed, state-owned oil companies were exempted from paying the export levy on petrol, diesel and ATF supplied to Nepal, Bhutan, Bangladesh and Sri Lanka.