Petrol Diesel Update: The government made a significant decision late Thursday evening regarding the windfall tax on petrol and diesel. The central government bumped up the export tax on petrol by Rs 2 to Rs 2.50 per litre, while the duty on diesel was lowered from Rs 16 to Rs 8.50 per litre. Based on Reuters reporting, the updated rates take effect today, October 16, 2026.
New tax rates on petrol and diesel
Following the government’s decision, petrol exports will now face a windfall tax of Rs 2.50 per litre. In contrast, the tax on diesel exports has been cut by Rs 7.50 per liter. The duty on aviation turbine fuel (ATF) exports remains unchanged.
Will the reduction make petrol and diesel expensive in the country?
This move won’t directly affect domestic petrol and diesel prices. The government hasn’t adjusted the current taxes on petrol and diesel supplied for domestic use. So it’s hard to say whether petrol and diesel will become pricier or cheaper for everyday consumers based purely on the export tax adjustment.
When do petrol and diesel prices change?
In nations where petrol and diesel prices are entirely market-driven, shifts in crude oil prices show up right away. But in India, while oil marketing companies set fuel prices, the government has a say in them. That’s because state-owned companies run over 90 percent of petrol stations across India. Independent players like Nayara and Reliance-BP adjust their prices on their own. Plus, fuel prices are also shaped by taxes. When excise duty on fuel is steep, the effect of crude oil price swings tends to be smaller.
Petrol-diesel rates released
Following the overnight change in windfall tax, HPCL, IOCL, and BPCL released petrol and diesel rates on Friday morning. The price of a liter of petrol in Delhi remains stable at Rs 102.12 and diesel at Rs 95.20. This means there has been no change in petrol and diesel rates.
Windfall tax is reviewed every 15 days
The government reviews the windfall tax rate every 15 days to account for fluctuations in international crude oil and petroleum product prices. The purpose of this tax is to maintain a balance between fuel exports and domestic availability.
India first imposed windfall taxes, also known as windfall taxes, on fuel exports in July 2022 and withdrew them two years later. The government then reintroduced the windfall tax in March 2026 after crude oil prices surged during the US-Israeli war on Iran.