India has announced a fresh cut in export duties on petrol, diesel and jet fuel amid continued unrest in West Asia — with the revised rates set to take effect from June 1. The government has halved the windfall gains tax on export of petrol to Rs 1.5 litre and significantl reduced the levy on diesel and aviation turbine fuel. India introduced export duties earlier this year to ensure adequate fuel supply and reviews the rates every fortnight. Domestic rates will remain unchanged following the recent hikes in petrol, diesel, CNG and LPG prices.

According to a notification from the Finance Ministry, the duty on exports of petrol has ​been set ​at Rs 1.5 ⁠per litre while that on diesel has ‌been set at Rs 13.5. Export duties on ATF have been set at Rs 9.5 per ⁠litre for the fortnight starting June 1. Rates are being revised on a ⁠fortnightly ‌basis following review of international prices of crude oil, petrol, diesel ‌and ATF ​during ​the ​period.

The government notice also clarified that there was no ​change in the ⁠existing excise duty rates on petrol and diesel cleared for ‌domestic ⁠consumption. Road and infrastructure cess will be nil on the export of petrol and diesel.

What is a windfall tax?

A windfall tax is levied when corporations make abnormally high profits due to exceptional conditions. The US-Israeli war against Iran and subsequent strikes across the Gulf region have created massive disruptions in the fuel supply chain. The Strait of Hormuz remains ‘closed’ for most ships, and many supply and production facilities in the Middle East have been affected. The conflict has sent global commodity prices skyrocketing and created severe shortages for many countries.

The government had previously imposed a windfall gains tax of Rs 3 per litre on petrol exports from May 16. The levy on diesel was reduced to Rs 16.5 per litre and aviation turbine fuel to Rs 16 per litre earlier this month. India had imposed an export duty on diesel at Rs 21.50 a litre, and on ATF at Rs 29.5 a litre on March 26. In the review on April 11, the duties were hiked to Rs 55.5/litre and Rs 42/litre. In the April 30 review, the duties were cut to Rs 23/litre and Rs 33/litre.

The windfall tax was levied to increase domestic availability of the fuel amid the US-Israel and Iran war. They were also aimed at restraining exporters from taking undue advantage due to price differences, as globally crude oil prices had risen since the beginning of the war.