Petrol and diesel gets excise duty cuts
The Indian government has announced a sharp reduction in excise duties on petrol and diesel in an effort to shield consumers and the energy sector from rising global oil prices. The duty on petrol has been cut by Rs 10 per litre to Rs 3 per litre, while diesel will now attract no excise duty.
- No exice duty on diesel
- Excise duty on petrol cut by Rs 7Â
- Excise duty of Rs 50 per litre on aviation turbine fuel (ATF)
The decision comes at a time when global oil markets are facing significant uncertainty due to geopolitical tensions. The ongoing conflict involving the United States and Israel with Iran has disrupted energy supply routes, particularly after Tehran blocked the Strait of Hormuz. The strategic waterway is responsible for transporting nearly one-fifth of the world's crude oil and gas supplies, estimated at around 20–25 million barrels per day. Before the conflict escalated, India sourced roughly 12–15 percent of its crude imports through this route.
By reducing taxes on road fuels, the government aims to ease the burden on oil marketing companies and prevent a sharp rise in retail fuel prices amid volatile crude rates.
However, the tax relief does not extend to all fuels. The government has imposed a special additional excise duty of Rs 50 per litre on aviation turbine fuel (ATF). After accounting for exemptions and adjustments, the effective duty is expected to be significantly lower, at around Rs 29.5 per litre. The move indicates a policy shift where aviation fuel will carry a relatively higher tax burden compared to petrol and diesel.
Alongside the duty revisions, the government has also tightened regulations related to fuel exports. Earlier, exporters benefited from broad excise exemptions on shipments of petrol, diesel and ATF. Under the new rules, these benefits will now be restricted to specific categories, signalling a more controlled approach toward fuel exports.
Despite the stricter export policy, certain exceptions remain. Public sector oil companies supplying fuel to neighbouring countries such as Nepal, Bhutan, Bangladesh and Sri Lanka will continue to receive preferential treatment. In addition, export consignments that were approved earlier will not be affected by the new policy, providing relief to companies that already have contractual commitments.
The revised duty structure reflects the government's effort to prioritise domestic fuel availability and maintain price stability during a period of global market volatility. By lowering taxes on petrol and diesel while introducing targeted levies and tighter export norms, the government has effectively reshaped the country's fuel tax framework to address current energy challenges.