NEW DELHI, October 16, 2026: India has raised the windfall tax on petrol exports to ₹2.5 per litre while cutting the levy on diesel exports to ₹8.5 per litre, according to a government order reported late Thursday. The revised rates take effect on Friday, October 16, as the Centre continues its regular review of taxes on petroleum products shipped overseas.
The petrol export levy increases from ₹0.5 per litre, while the diesel export levy falls from ₹16 per litre. That means the petrol duty rises by ₹2 per litre and the diesel duty declines by ₹7.5 per litre. The duty on aviation turbine fuel (ATF), or jet fuel, is unchanged, according to The Economic Times, which cited the Central Board of Indirect Taxes and Customs (CBIC).
Reuters reported the revised rates at 12:41 a.m. IST on October 16, citing the government order issued late on October 15. The changes concern fuel exported from India, not a new nationwide tax on petrol and diesel purchased by motorists at filling stations.
New petrol and diesel export duties from October 16
| Fuel | Previous export levy | New export levy | Change |
|---|---|---|---|
| Petrol | ₹0.5 per litre | ₹2.5 per litre | Increase of ₹2 per litre |
| Diesel | ₹16 per litre | ₹8.5 per litre | Decrease of ₹7.5 per litre |
| Aviation turbine fuel | Existing rate | Unchanged | No revision reported |
The new diesel rate represents a reduction of roughly 46.9% from the previous ₹16-per-litre duty. Petrol’s export levy increases fivefold from the previous ₹0.5 rate, although its absolute level remains below the diesel duty. These comparisons concern the export levies alone and do not measure changes in refinery profits or retail fuel prices.
The government periodically adjusts these taxes in response to movements in international crude and refined-product prices. The two fuels are subject to different market conditions and refining margins, so the duty on one product can move in the opposite direction from the duty on another.
Also read: India Cuts Windfall Tax on Diesel and Jet Fuel Exports
A windfall tax is a levy designed to capture some of the gains businesses may earn when exceptional market conditions push prices or margins higher. In India’s petroleum sector, export levies can also affect the commercial incentive to send refined fuel overseas rather than supply the domestic market.
India introduced windfall taxes on fuel exports in July 2022, withdrew them in December 2024 and reintroduced export levies in March 2026 after oil prices increased amid the conflict involving the United States, Israel and Iran. The current framework is reviewed approximately every fortnight, rather than operating as a fixed permanent rate.
The October 16 decision follows a reduction at the start of the month, when the diesel export duty was cut from ₹20 to ₹16 per litre and the ATF levy was reduced from ₹15 to ₹10.5 per litre. The new decision lowers diesel’s duty further while reversing the earlier direction for petrol. It does not establish that all export levies will continue falling at future reviews.
For a refinery exporting diesel, a lower duty can reduce the tax cost per litre sold abroad. That may improve the relative economics of exporting diesel, but the actual effect on margins will depend on crude acquisition costs, overseas diesel prices, freight, insurance, currency movements and contractual arrangements.
Conversely, a higher petrol export levy increases the tax cost associated with overseas petrol shipments. Exporters may respond differently depending on their product mix, destination markets and ability to sell fuel domestically. The new rates alone do not establish whether India’s total fuel exports will rise or fall.
India is a major petroleum refining centre, and changes in export taxation can affect both private and state-owned companies with overseas customers. However, the financial impact on any individual refiner cannot be calculated from the headline duty rates without information on export volumes, margins and applicable exemptions.
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No automatic retail price reduction follows from this announcement. The CBIC-linked report said there was no change in the existing duty rates for petrol and diesel cleared for domestic consumption. Export levies and domestic fuel taxes apply to different transactions, and the change announced Thursday does not itself require petrol stations to alter their prices.
Domestic pump prices are influenced by international crude and refined-fuel prices, the rupee, central and state taxation, marketing margins and the decisions of fuel retailers. A fall in the tax paid on diesel exports should not be presented as a cut in the tax paid by Indian motorists.
The distinction is especially important during periods of volatile global energy prices. Some private retailers have recently raised pump prices or restricted sales as costs increased, while the government has pressed companies to maintain fuel availability.
Also read: India Tells Private Fuel Retailers to End Petrol, Diesel Rationing
International oil and diesel markets have been under pressure from disruptions to energy supply and transport. On October 15, the International Energy Agency said its members would accelerate previously committed emergency stock releases, including more than 20 million barrels of diesel. Such measures may influence international prices, but their effect is not guaranteed and can vary by region.
India imports most of the crude oil it uses. Sustained high international prices can therefore increase the import bill, add pressure to the rupee and raise costs for businesses dependent on transport and energy. At the same time, the country exports refined petroleum products, making export-duty decisions relevant to its refiners.
The latest revision illustrates how policymakers are adjusting different fuel levies independently. A reduced diesel export duty does not necessarily mean global diesel shortages have ended, and a higher petrol levy is not proof of a domestic petrol shortage.
Also read: Nayara Energy Raises Petrol by ₹5, Diesel by ₹3 Per Litre
Refiners and energy-market participants will watch the next scheduled duty review, developments in crude and product prices, and any further government clarification about the applicable notifications. The rate changes take effect on October 16; they are not a forecast of where international fuel prices will move.
The most immediate confirmed result is a higher tax on petrol exported from India and a lower tax on diesel exported from India. Domestic consumption duties remain unchanged under the reported order.