The government made a key announcement on Tuesday: for the two weeks starting July 1, 2026, it increased the windfall profits tax on petrol exports while reducing the duty on diesel and ATF. As a result, the special additional excise tax (SAED) on diesel exports will drop from the current rate of Rs 14 per litre to Rs 8.5 per litre. Similarly, SAED on ATF exports will be Rs 7.5 per litre instead of the current Rs 12.5 per litre.
Why was the windfall tax on petrol exports increased by the government starting on July 1?
However, the levy on petrol exports has increased from the current Rs. 1.5 per litre to Rs. 4 per litre. The Finance Ministry’s announcement states that the duty increases would take effect on July 1, 2026.
The government placed an export levy on fuel and ATF on March 27 and changed the rate every two weeks amid rising tensions in West Asia. Petrol was subject to an export duty starting on May 16.
Exports of petrol, diesel and ATF made by public sector oil companies to Nepal, Bhutan, Bangladesh and Sri Lanka were exempt from the export charge when it was imposed in March. According to the finance ministry, shipments from public sector oil companies to Mauritius and the Maldives are now also covered by the aforementioned exemption.
What is the new Special Additional Excise Duty (SAED) on exports of diesel?
“In exercise of the powers conferred by Section 5A of the Central Excise Act, 1944 (1 of 1944) read with Section 147 of Finance Act, 2002 (20 of 2002), the Central Government, being satisfied that it is necessary in the public interest, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue),” the Finance Ministry issued a press release.
No. 06/2026-Central Excise, dated March 26, 2026, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 205(E), dated March 26, 2026, specifically: In the aforementioned notification, in the Table, (i) against serial number 1, in column (4), the entry “Rs. 4 per litre” shall be substituted with “Rs. 8.5 per litre” in column (4).
“This notification shall come into force with effect from 1st July, 2026,” the notification further stated. Additionally, the ministry stated that the current duty rates on petrol and diesel approved for domestic use have not changed. In the midst of the West Asian conflict, the windfall tax was imposed to boost domestic fuel availability.
On July 1, the government will remove restrictions on the sale of fuel and diesel to commercial buyers.
In the meanwhile, the government will remove limitations on the sale of petrol and diesel to commercial and industrial customers starting on July 1. The goal of this action is to lessen the emergency measures put in place to control gasoline supplies. In an effort to improve the nation’s fuel supply situation, the action will also remove the cap on the amount of diesel that can be sold to a single vehicle in a single day at retail fuel stations.
The June 12 directive, which limited diesel sales to a single vehicle at 200 litres per day and prohibited industrial, commercial and institutional customers from buying petrol and diesel from retail fuel stations, was revoked by the Ministry of Petroleum and Natural Gas in an order dated June 29.
The limitations were put in place to avoid local fuel shortages during disruptions in the world’s fuel supply. “The temporary measures were considered necessary and expedient in the public interest to maintain supplies of motor spirit (petrol) and high speed diesel…and secure their equitable distribution and availability at fair prices,” the directive issued on June 29 stated.
