Government reduces export duty on petrol to nil; diesel and ATF duty also reduced
The export duty (levied as a Special Additional Excise Duty, or SAED) on petrol exports was reduced to nil, down from ₹3.5 per litre.
The combined levy on diesel exports was cut to ₹24 per litre from ₹25.5 per litre, and the levy on Aviation Turbine Fuel (ATF) exports was cut to ₹19.5 per litre from ₹22 per litre.
The revised rates took effect from 15 August 2026, following the government's fortnightly review of these export levies.
The levies were reintroduced in March 2026 amid a rise in international crude and refined-product prices linked to instability in West Asia, with the stated objective of discouraging exports and ensuring adequate domestic fuel availability.
Special Additional Excise Duty (SAED) / "Windfall Tax" on Fuel Exports
SAED, popularly called a windfall tax, is a levy imposed on domestically produced crude oil and on exports of petrol, diesel and ATF to capture windfall gains refiners and producers earn when international fuel prices spike, and to discourage diversion of fuel away from the domestic market. It is levied under Section 5A of the Central Excise Act, 1944, read with provisions of the Finance Act, 2018 and Finance Act, 2021, via notifications issued by the Central Board of Indirect Taxes and Customs (CBIC). Rates are revised roughly every two weeks based on average international prices over the preceding fortnight, rather than being fixed like a conventional customs duty.
Key Details
- Legal basis: Section 5A of the Central Excise Act, 1944, combined with the Finance Acts of 2018 and 2021.
- First introduced: July 2022, in response to a sharp rise in global crude prices; withdrawn in December 2024.
- Reintroduced: March 2026, amid renewed crude price volatility linked to the West Asia conflict.
- Review frequency: fortnightly, by the Ministry of Finance/CBIC, based on average international prices of crude, petrol, diesel and ATF.
- Diesel's total levy combines SAED with the Road and Infrastructure Cess (RIC).
This latest rate revision (petrol to nil, diesel to ₹24/litre, ATF to ₹19.5/litre from 15 August 2026) is a routine application of this fortnightly review mechanism, illustrating how the levy is calibrated up or down in response to global price movements rather than being a permanent tariff.
Export Duty vs Customs Duty — Trade Policy Instruments
Export duty is a tax levied on goods leaving the country, distinct from import (customs) duty, and is one of the less commonly used trade-policy instruments in India, typically reserved for restricting outflows of items in domestic short supply (e.g., certain minerals, or refined fuels during a supply crunch) rather than for revenue generation. It falls under the Customs Act, 1962 and Customs Tariff Act, 1975 framework generally, though the specific petroleum export levies since 2022 have been structured as an excise-duty-based SAED rather than a conventional customs export duty.
Key Details
- Export duties are a demand-management/supply-assurance tool, unlike import tariffs which are primarily protective or revenue tools.
- India has historically used export duties sparingly — for example, on iron ore and certain agricultural commodities during price surges.
- The petroleum sector's 2022–24 and 2026 windfall levies are administratively distinct (excise-based) from a classic customs export duty, even though they are commonly reported in the press as "export duty."
The article's framing of these levies as "export duty" is a useful prompt to distinguish, for exam purposes, between genuine customs export duties and excise-based special levies like SAED, which achieve a similar domestic-supply-protection objective through a different legal route.
- Petrol export duty (SAED): cut to nil from ₹3.5 per litre.
- Diesel export levy: cut to ₹24 per litre from ₹25.5 per litre.
- ATF export levy: cut to ₹19.5 per litre from ₹22 per litre.
- Revised rates effective from 15 August 2026.
- Review cycle: fortnightly, based on average international prices of crude oil, petrol, diesel and ATF.
- Current levy regime reintroduced in March 2026; earlier regime ran July 2022 to December 2024.