Explained: What is a windfall tax on fuel exports?

A windfall tax is a levy on unusually high earnings that arise from market conditions.

India applies such duties on exports of petrol, diesel and aviation fuel.

They encourage refiners to supply the domestic market first.

From October 16, the petrol duty is Rs 2.50 per litre and the diesel duty is Rs 8.50 per litre.

The duties are reviewed every fortnight.

The duty on aviation turbine fuel stayed at Rs 10.50 per litre, according to Reporters Today.

The changes were issued in a government order late on Thursday, October 15, according to News24.

The previous revision was on October 1, according to Reporters Today, and the duties are reviewed every fortnight, according to The Statesman.

The levies were withdrawn in 2024 and reintroduced in March 2026 after crude oil prices spiked during the US-Israeli war with Iran, according to The Statesman.

The revision covers exports only, and domestic excise duties are unchanged, so it does not directly move pump prices, according to The Statesman.

HDFC Sky reported that petrol and diesel prices held steady on October 16 as the government revised the export duties.

A windfall tax is a levy on unusually high profits that arise from market conditions and not from a company’s own decisions, and in this case it is applied to fuel exports.

An export duty on fuels is meant to encourage refiners to supply the domestic market first and to capture part of the extra earnings from high international prices.

A higher duty on petrol exports makes selling petrol abroad less attractive, while a lower duty on diesel makes diesel exports more attractive than before.

The reports did not give the reasons for the specific changes in the rates.

Reliance Industries and other refiners that export fuel are affected by the duties, but the reports reviewed carried no company response.

Jamnagar refinery (file image), Wikimedia Commons, CC BY-SA 4.0