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The government has increased the Special Additional Excise Duty (SAED), commonly known as the windfall tax, on exports of petrol, diesel and aviation turbine fuel (ATF). The revised rates came into effect on August 3.
What is a windfall tax?
It is a levy imposed on companies that earn unusually high profits due to external events, such as a sudden surge in global commodity prices, rather than improvements in their own operations.
In India's case, it is applied to fuel exports when refiners earn exceptional gains from high international oil prices.
The revised rates: the export duty on petrol has been increased to ₹3.5 per litre from ₹2.5 per litre. The levy on diesel exports has been raised to ₹24 per litre from ₹15.5 per litre, while the duty on ATF exports has increased to ₹22 per litre from ₹14.5 per litre.
What does this mean for consumers?
The increase applies only to exports. There has been no change in the excise duty on petrol and diesel sold in the domestic market, so consumers are unlikely to see any immediate impact on retail fuel prices because of this revision.
Why has the government raised it?
The move is aimed at ensuring adequate domestic fuel supplies while boosting government revenues at a time when oil prices remain volatile due to tensions in the Middle East.
A quick background: India first introduced the windfall tax in July 2022 to capture extraordinary gains made by oil companies during the global crude price rally. It collected around ₹25,000 crore in 2022, followed by ₹13,000 crore in FY24.
The tax was scrapped in December 2024 but reintroduced in March 2026 after crude prices surged during the US-Israel conflict with Iran.
Oil prices have remained volatile since the last revision two weeks ago. After falling sharply on Monday, crude prices edged higher again on Tuesday as concerns over potential supply disruptions in the Middle East continued to support prices.
