The government raised the windfall tax on exports of diesel and aviation turbine fuel (ATF) while reducing the levy on petrol, effective July 16, 2026, as part of its regular fortnightly review of export duties. The Special Additional Excise Duty on diesel exports went up to ₹15.5 per litre from ₹8.5 per litre, and on ATF exports to ₹14.5 per litre from ₹7.5 per litre. The export duty on petrol was lowered to ₹2.5 per litre from ₹4 per litre, reflecting shifting global refining margins and supply dynamics driven by the ongoing West Asia conflict.
What Is SAED and How Does It Work?
The Special Additional Excise Duty (SAED) is a tax levied by the central government on the export of specific petroleum products. It was introduced in July 2022 as part of a windfall tax regime to capture excess profits that domestic oil producers and refiners were making due to a surge in global crude oil prices after the Russia Ukraine conflict.
The SAED is reviewed every fortnight (15 days) by the Ministry of Finance based on movements in global crude benchmarks and changes in refining margins. Alongside SAED, the government also levies a Road and Infrastructure Cess (RIC) on certain fuel exports, though the recent revision relies entirely on SAED. The rates are notified through the Petroleum Planning and Analysis Cell (PPAC), an attached office of the Ministry of Petroleum and Natural Gas established in 2002.
The tax acts as a wedge between international and domestic prices. When global crude prices rise sharply, Indian refiners have an incentive to sell more abroad to capture higher margins. The SAED makes exports less profitable, thereby ensuring adequate supply in the domestic market at controlled prices.
Revised Export Duties at a Glance
The following table summarises the old and new SAED rates on fuel exports effective July 16, 2026:
| Product | Old SAED (₹ per litre) | New SAED (₹ per litre) | Change |
|---|---|---|---|
| Diesel | 8.5 | 15.5 | Increased by ₹7.0 |
| ATF | 7.5 | 14.5 | Increased by ₹7.0 |
| Petrol | 4.0 | 2.5 | Reduced by ₹1.5 |
The duties apply only to exports. There is no change in the excise duty rates on petrol and diesel cleared for domestic consumption, which remain at existing levels.
Why the Government Adjusts These Rates Every Fortnight
The SAED on fuel exports is not a fixed tax. The government reviews and revises it every fortnight based on a formula linked to global crude oil prices and refining margins (also called cracks, the difference between the price of crude oil and the price of refined products).
When international refining margins rise, Indian refiners earn more on each barrel they export. Without the SAED, they would prioritise export markets over domestic sales, potentially creating shortages of diesel and ATF within India. By raising the levy, the government captures a portion of these windfall gains and reduces the incentive to export.
The latest increase in diesel and ATF duties was driven by higher global refining margins, partly caused by the reinstatement of a US naval blockade on Iran, which threatened oil transit through the Strait of Hormuz, a chokepoint that handles roughly 20 percent of global oil flows. Brent crude climbed to a one-month high of around $84.73 per barrel during this period.
The reduction in petrol export duty, on the other hand, suggests that global petrol margins have softened relative to diesel and ATF, making the earlier higher levy unnecessary. The fortnightly recalibration allows the government to respond quickly to these changing market conditions without requiring parliamentary approval each time.
History of India’s Windfall Tax on Fuel Exports
India first introduced the windfall tax in July 2022, when global crude prices soared past $100 per barrel following the Russia Ukraine war. The government imposed SAED on the export of petrol, diesel, and ATF, along with a separate levy on domestic crude oil production. The objective was to tax the extraordinary profits that oil producers and refiners were earning due to high international prices.
The regime saw frequent revisions throughout 2022 and 2023, with rates moving up and down based on global market conditions. In December 2024, the government scrapped the windfall tax entirely, including the SAED on fuel exports and the Road and Infrastructure Cess. Global crude had stabilised between $70 and $75 per barrel, and tax collections had fallen sharply. The government collected ₹130 billion through the windfall tax in 2023-24, down from ₹250 billion in 2022-23.
However, the respite was short-lived. Escalating tensions in West Asia from early 2026, including renewed US Iran hostilities, pushed crude prices up again. The government reinstated export duties on diesel and ATF on March 27, 2026, and later extended the levy to petrol from May 16, 2026. Since then, the rates have been revised roughly every fortnight, reflecting the volatile geopolitical and energy landscape.
Impact on Refiners and the Domestic Market
The SAED primarily affects private refiners such as Reliance Industries, which exports a significant share of its refinery output from its Jamnagar complex, the world’s largest refining hub. State-owned refiners like Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL) are also impacted, though they tend to supply more to the domestic market.
For the domestic consumer, the SAED revisions do not directly affect retail petrol and diesel prices, which remain regulated by the government through state-run oil marketing companies. The government has kept excise duties on domestic fuel unchanged. However, by discouraging exports, the policy helps maintain adequate product availability within the country, preventing the kind of supply tightness that could push up pump prices.
Earlier in 2026, the government had to impose temporary restrictions on bulk fuel purchases under the Essential Commodities Act to prevent industrial buyers from hoarding cheaper retail fuel. Those restrictions have since been lifted after domestic distribution stabilised.
The revised SAED also has implications for government revenues. Higher duties on diesel and ATF exports will boost central excise collections, helping offset some of the subsidy burden that arises when state-run oil companies sell fuel below cost to keep retail prices stable.
Key Takeaways
- The Special Additional Excise Duty (SAED) on diesel exports was raised to ₹15.5 per litre and on ATF to ₹14.5 per litre effective July 16, 2026.
- The export duty on petrol was reduced to ₹2.5 per litre from ₹4 per litre during the same revision.
- SAED rates are reviewed every fortnight by the Ministry of Finance based on global crude prices and refining margins.
- India first imposed the windfall tax on fuel exports in July 2022 following the Russia Ukraine war and scrapped it in December 2024, before reinstating it in March 2026 amid West Asia tensions.
- The tax is administered through the Petroleum Planning and Analysis Cell (PPAC), established in 2002 under the Ministry of Petroleum and Natural Gas.
- Domestic fuel excise rates remain unchanged, and the SAED applies only to exports to ensure adequate domestic availability.
