Govt cuts excise duty on petrol, diesel; windfall tax on fuel export back
GST
Dated:- 27-3-2026
PTI
New Delhi, Mar 27 (PTI) The government has slashed excise duty on petrol and diesel by Rs 10 per litre each, a move aimed at shielding domestic consumers from a surge in global oil prices triggered by the Middle East conflict, at an estimated revenue cost of Rs 1.75 lakh crore.
Alongside, the government brought back duties on export of diesel and aviation turbine fuel (ATF).
Special additional excise duty on petrol has been cut from Rs 13 a litre to Rs 3 and the same on diesel from Rs 10 per litre to nil, according to a notification issued late on Thursday.
Alongside, the government imposed an export duty of Rs 21.5 per litre on diesel and Rs 29.5 per litre on aviation turbine fuel (ATF), reinstating a levy first introduced in July 2022 to curb windfall gains by refiners following Russia's invasion of Ukraine and later withdrawn in December 2024.
However, unli
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nd Tehran's sweeping retaliation disrupts global supply.
Despite oil prices rising above USD 100 per barrel, retail pump rates had remained on freeze. This had led to oil companies incurring record losses which had even started impacting their working capital.
To ease the pain, the government cut excise duty. The reduction will be adjusted against the Rs 24 a litre required increase in petrol and Rs 30 per litre hike in diesel rates warranted due to the rise in international oil prices.
Rating agency ICRA, in a note on Thursday, had said if the average crude oil price goes up to USD 100-105 per barrel, fuel retailers would incur a loss of Rs 11 per litre on petrol and Rs 14 per litre on diesel, respectively.
International oil prices touched USD 119 per barrel earlier this month on the intensifying Iran war, before pulling back to around USD 100 a barrel.
The first signs of stress came when Nayara Energy, the country's largest private fuel retailer, raised petrol pri
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om around USD 70 dollars per barrel to around USD 122.
“Consequently, petrol and diesel prices for consumers have gone up all over the world. Prices have increased by around 30-50 per cent in Southeast Asian countries, 30 per cent in North American countries, 20 per cent in Europe and 50 per cent in African countries,” he said, adding that the government had two choices either increase prices drastically or bear the brunt on its finances.
In keeping with the commitment of the last four years since the conflict in Russia-Ukraine started, the government decided to take a hit on its own finances again to safeguard the Indian citizens.
“The government has taken a huge hit on its taxation revenues to ensure very high losses of oil companies (approximately Rs 24 per litre for petrol and Rs 30 a litre for diesel) at this time of sky high international prices are reduced,” he said.
“At the same time, export tax has been levied as international prices of petrol and diesel have
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