India resets windfall taxes on fuel exports

India’s central government has implemented a new set of windfall export duties on petroleum products, effective October 16, 2026. The move adjusts the tax burden on fuel exported from the country, while leaving charges on domestically consumed fuel unchanged. These revisions form part of the established schedule under which authorities reassess export taxes at regular intervals.

Under the latest decision, the export windfall levy on petrol has been raised to ₹2.5 per litre from ₹0.5 per litre. In contrast, the export duty on diesel has been reduced to ₹8.5 per litre from ₹16 per litre. The change alters the relative tax treatment of the two fuels, increasing the cost of exporting petrol while lowering that of exporting diesel.

A notification issued by the Central Board of Indirect Taxes and Customs specifies that the revised windfall tax rates apply only to exports of petrol and diesel. The clarification confirms that the order does not extend to domestic consumption, meaning retail and other domestic fuel uses are outside the scope of this adjustment. As a result, the direct effect of this revision is confined to export flows rather than internal fuel pricing.

By focusing exclusively on exports, the measure targets additional gains that refiners may earn from international price movements, rather than altering domestic tax structures. Companies involved in fuel exports will now face different margin dynamics between petrol and diesel shipments, reflecting the higher levy on petrol exports and the reduced charge on diesel exports.

The government maintains a policy of reviewing export windfall tax rates on petroleum products every fortnight. These periodic reviews are based on recent movements in international crude oil prices and prices of refined petroleum products. The latest revision continues this framework, updating the level of export duties in response to changes in global energy markets.

Frequent recalibration of these levies is designed to align export taxation with prevailing external price conditions. For refiners and exporters, this creates an environment in which tax obligations on exports can change at short notice, requiring close monitoring of the biweekly review cycle and of shifts in global crude and product benchmarks.