- Diesel export tax nearly doubled to Rs 15.50 per litre.
- ATF export tax hiked to Rs 14.50, petrol tax eased.
- Government aims to stabilize domestic fuel prices and ensure supply.
The Centre on Thursday announced a sharp increase in windfall taxes on exports of diesel and aviation turbine fuel (ATF), due to surging global oil prices amid escalating conflict between the United States and Iran.
According to a Finance Ministry notification, the tax on diesel exports has nearly doubled, rising from Rs 8.50 to Rs 15.50 per litre, while the tax on ATF has been hiked from Rs 7.50 to Rs 14.50 per litre. These new rates take effect today, Thursday, July 16.
Conversely, the government has eased the export tax on petrol, lowering it from Rs 4.00 to Rs 2.50 per litre. Domestic consumers, however, will see no immediate impact at the pump, as excise duties on petrol and diesel cleared for domestic consumption remain unchanged.
A windfall tax is a special government levy imposed on industries that experience sudden high profits, due to external events, such as geopolitical conflicts or supply chain disruptions, rather than standard business growth.
Oil Prices Soar As US-Iran Hostilities Escalate
Global oil prices surged this week after an escalation in hostilities between the United States and Iran. The price of the commodity rose on Wednesday, before easing slightly, after US President Donald Trump reimposed a naval blockade on all Iranian ports, prompting Tehran to launch swift retaliatory strikes against US infrastructure in the region.
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Why Has The Government Raised Taxes On Diesel And Jet Fuel Exports?
Economic analysts state that the main goal of the tax hike is to keep domestic fuel prices stable and ensure an adequate supply within the country.
Without this increase in export taxes, Indian oil refiners would likely export as much fuel as possible to maximise profits abroad. This could have triggered a domestic fuel shortage and driven up inflation. By raising export taxes, the government makes exporting less attractive, ensuring that refiners prioritise the domestic market.
ALSO READ: Government Raises Windfall Tax On Diesel, ATF To Ensure Domestic Fuel Availability; Check New Prices
While the move ensures sufficient jet fuel for domestic airlines, air travel may still get costlier in the near future due to surging global prices. However, no fare increases have been officially announced.
However, the diesel tax hike will help keep local transport and freight costs stable, shielding the general public from immediate price increases.
(With Inputs From Reuters And Jagran.com)