New Delhi, September 1: The Indian government has revised the export duty framework for petroleum products, effective September 1. This includes a reduction in both the export duty and windfall tax on diesel.
The export duty on diesel has been cut from ₹3 per liter to ₹1 per liter. Additionally, the windfall tax on diesel exports has been reduced from ₹24 per liter to ₹19 per liter.
This revised duty structure is expected to alter the cost framework for exporters of petroleum products. The changes may provide relief to companies exporting diesel from India, potentially lowering their tax burden compared to previous rates.
The government periodically reviews the duties and windfall taxes on petroleum products in response to fluctuations in international oil prices and domestic market conditions.
For instance, when the international price of a commodity suddenly rises, producers or sellers may experience significantly higher profits. The additional tax imposed by the government on such excess profits is known as the windfall tax.
The government imposes this tax on petroleum products to discourage refiners from exporting petrol, diesel, or aviation turbine fuel (ATF) solely for higher profits. Increased taxation makes exports less attractive and helps maintain a sufficient supply of fuel in the domestic market.
The government regularly assesses these tax rates, considering factors such as global crude oil prices, international fuel prices, export margins, and domestic fuel supply.
An increase in taxes on petrol and diesel exports raises the cost of exporting for refiners. If refiners cannot pass this additional tax burden onto foreign buyers, their profit per liter may decrease.
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