The government will review the special additional excise duty (SAED), or windfall tax, on diesel and aviation turbine fuel (ATF) every fortnight, CBIC Chairman Vivek Chaturvedi said on Friday.
The SAED has been reintroduced to ensure adequate domestic availability of diesel and ATF amid global supply disruptions. The levy is expected to generate around ₹1,500 crore in revenue during the first fortnight, Chaturvedi said while briefing the media.
As part of the measure, the government has imposed export duties of ₹21.5 per litre on diesel and ₹29.5 per litre on ATF, effective March 27. The move is aimed at discouraging exports and improving domestic supply.
The windfall tax was first introduced in July 2022 following the Russia’s invasion of Ukraine to curb extraordinary gains by refiners amid soaring global crude prices. It was later withdrawn in December 2024 before being reintroduced now.
In a parallel move to protect consumers, the government has cut excise duty on petrol and diesel by ₹10 per litre each. The reduction is expected to result in a revenue loss of about ₹7,000 crore over the next 15 days.
Finance Minister Nirmala Sitharaman said the excise cut is intended to shield consumers from rising fuel prices triggered by the ongoing West Asian conflict. She added that the duty reductions would help stabilise retail prices and ensure affordability.
Chaturvedi noted that the situation remains dynamic, with the revenue department closely monitoring supply trends. The excise cut is also aimed at reducing under-recoveries faced by oil marketing companies (OMCs), which have been under pressure due to elevated global crude prices.
Crude oil prices surged nearly 50% this month amid escalating tensions involving the United States, Israel, and Iran, briefly touching $119 per barrel before easing to around $100. Despite the spike, retail fuel prices at state-run outlets have largely remained unchanged, leading to mounting losses for OMCs.
Private retailer Nayara Energy recently raised petrol prices by ₹5 per litre and diesel by ₹3 per litre, reflecting the strain in the sector. However, state-owned fuel retailers, which control about 90% of the market, have maintained stable prices so far.
The government’s dual strategy of imposing export duties while cutting excise taxes seeks to balance domestic supply needs, consumer protection, and the financial health of oil companies amid ongoing global volatility.
