In a move aimed at shielding consumers from volatile global oil markets, the Centre has reduced special additional excise duty on petrol and diesel while revising taxation on aviation turbine fuel, as crude prices climb amid the ongoing West Asia crisis.
The Finance Ministry announced that excise duty on petrol has been slashed from Rs 13 to Rs 3 per litre, while diesel duty has been reduced from Rs 10 to zero. The decision, which took immediate effect following official notifications issued on March 26 under the Central Excise Act, 1944, and related Finance Acts, is intended to stabilise fuel prices across the country.
The government cited supply disruptions triggered by geopolitical tensions in West Asia as a key factor behind the move. In its order, the Centre noted that it was “necessary in the public interest so to do,” underlining the urgency of intervention as global energy uncertainty deepens.
Balancing revenue with relief
Alongside relief on road fuels, the government has introduced a new excise duty of Rs 50 per litre on aviation turbine fuel. However, exemptions have been structured to cap the effective duty at Rs 29.5 per litre in certain cases, limiting the financial burden on the aviation sector.
The notification specifies “Aviation Turbine Fuel Rs 50 per Litre” as special additional excise duty, with built-in exemptions to moderate its impact. Officials indicated that this calibrated approach seeks to balance fiscal considerations with sectoral stability.
Further adjustments in excise duties have also been introduced to maintain overall equilibrium in fuel pricing, suggesting a broader policy effort rather than a one-off intervention.
Exports excluded from revised rates
The revised duty structure will not apply to exports, except for supplies made by public sector oil companies to neighbouring countries, including Nepal, Bhutan, Bangladesh, and Sri Lanka. These transactions will continue under the updated system.
Amendments to the Central Excise Rules, 2017, clarify that rebate and export procedures will not extend to petrol, diesel, and aviation turbine fuel, except in the case of such cross-border supplies by public sector firms.
Responding to global uncertainty
The government maintained that the changes are in the public interest, aimed at balancing consumer relief, revenue requirements, and industry needs at a time of global energy instability.
With crude supply chains under strain and prices under pressure, the Centre’s decision reflects a calculated attempt to contain domestic price shocks while maintaining fiscal discipline.
