Windfall tax revised from September 1: Petrol export duty up from 0 to ₹1.5/litre, diesel ₹1; ATF levy cut ₹0.5

The central government has increased the windfall tax on petrol and diesel exports while making a marginal reduction in the levy on aviation turbine fuel (ATF), with the revised rates coming into effect from September 1.

The Finance Ministry announced the revised rates through a notification on Tuesday.

What changed in the latest revision?

The special additional excise duty (SAED) on diesel exports, along with the road and infrastructure cess, has increased by ₹1 per litre, from ₹24 to ₹25 per litre.

The SAED on petrol exports has been raised by ₹1.50 per litre, from zero to ₹1.50 per litre.

The SAED on ATF exports has been reduced by ₹0.50 per litre, from ₹19.50 to ₹19 per litre.

There is no change in the existing duty rates on petrol and diesel cleared for domestic consumption.

The government has been reviewing the export levy every fortnight since introducing duties on diesel and ATF on March 27 amid the escalation of tensions in West Asia. A similar levy was imposed on petrol exports from May 16.

The windfall tax was introduced to discourage exporters from taking advantage of higher global crude oil prices and to encourage adequate domestic availability of petroleum products during the West Asia crisis.

Oil prices rise over 2% as US-Iran tensions revives supply disruption fears

Oil prices climbed more than 2% on Tuesday as the resumption of hostilities between the United States and Iran in the Middle East heightened concerns over potential disruptions to crude supplies from the oil-producing region.

Brent crude futures rose $2.17, or 2.4%, to $92.66 a barrel by 1302 GMT. US West Texas Intermediate (WTI) crude also gained $2.48, or 2.89%, to reach $88.24 a barrel.

At these levels, both benchmarks had recovered most of the losses recorded over the previous week, following a renewed escalation in the Middle East conflict.

The latest rise in oil prices came after US President Donald Trump on Monday warned that Washington could carry out additional strikes against Iran. The warning followed the first direct exchange of attacks between the two countries since late July, further escalating tensions in a conflict that had recently evolved into an economic confrontation.

“The tit-for-tat missile exchanges between the U.S. and Iran bring validation to those who believe that even if not a ‘forever war’, this conflict will run and run,” PVM analyst John Evans said, according to Reuters.

Iranian President Masoud Pezeshkian said on Tuesday that Tehran would respond immediately if the US returned to its commitments under the interim peace agreement signed in June.

Meanwhile, mediation efforts by Qatar and Oman to reach an agreement on reopening the Strait of Hormuz have so far failed to yield a breakthrough. The strategically important waterway handled around one-fifth of global oil and liquefied natural gas (LNG) supplies before the war began in late February.

Tensions around the strait also escalated on Monday when two supertankers carrying Saudi crude were hit by unidentified projectiles within minutes of each other while passing through the waterway.

Saxo Bank analyst Ole Hansen said, "Fresh hostilities between the U.S. and Iran raised concerns about prolonged disruptions to energy flows through the Strait of Hormuz," adding that the absence of follow-through buying indicates that the market expects supply disruptions to remain limited to the levels already seen.

Two Saudi oil supertankers were hit by unidentified projectiles within minutes of each other on Monday while sailing through the Strait of Hormuz.

(With inputs from agencies)