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The government will review the special additional excise duty or windfall tax on diesel and ATF every fortnight, says CIBI Chairman Vivek Chaturvedi.
The government on Friday cut excise duty on petrol and diesel by Rs 10 per litre each, reducing the levy to Rs 3 per litre on petrol and nil on diesel.
The Centre’s decision to cut excise duty on petrol and diesel will result in a revenue loss of around Rs 7,000 crore in just 15 days, said Central Board of Indirect Taxes and Customs (CBIC) Chairman Vivek Chaturvedi on Friday. He also said the government will review the special additional excise duty or windfall tax on diesel and ATF every fortnight.
The move to levy special additional excise duty (SAED) is to ensure domestic availability of diesel and ATF, Chaturvedi said, while briefing the media.
The revenue gain from SAED is estimated at Rs 1,500 crore in the first fortnight, he added.
The government on Friday cut excise duty on petrol and diesel by Rs 10 per litre each, reducing the levy to Rs 3 per litre on petrol and nil on diesel. The step, aimed at providing relief to oil marketing companies (OMCs), comes amid a sharp surge in global crude oil prices triggered by the ongoing conflict involving the United States, Israel and Iran, and disruptions in the Strait of Hormuz, a key artery for global energy supplies.
The duty cut comes against the backdrop of escalating tensions in the Middle East, which have disrupted supply chains and pushed up crude prices, increasing the cost burden on fuel retailers.
Rating agency ICRA, in a note on Thursday, had said if the average crude oil price goes up to $100-105/bbl, fuel retailers would incur a loss of Rs 11 per litre on petrol and Rs 14 per litre on diesel, respectively.
ICRA had also said that the government may reduce excise duty rates on petrol and diesel to keep retail sale prices stable at existing levels, giving oil companies more headroom to collect additional revenue to compensate for refining losses.
The duty cut comes against the backdrop of a deepening global energy crisis. Crude oil prices have surged nearly 50 per cent since late February, briefly touching $119 per barrel before easing to around $100.
The trigger has been escalating tensions involving the US and Israel with Iran, along with Tehran’s effective blockade of the Strait of Hormuz, through which nearly 20-25 million barrels per day of oil flows globally.
For India, which imports nearly 88 per cent of its crude oil requirements, the disruption has significant implications. Around 12-15 per cent of India’s crude imports are routed through this corridor.
With tanker movements impacted and insurance cover withdrawn, supply risks have increased, pushing up procurement costs.
Alongside the duty cuts, the government has imposed additional excise duty on aviation turbine fuel (ATF) and tightened export-related benefits, signalling a broader recalibration of fuel taxation.
Despite oil prices rising above $100 per barrel, retail pump rates had remained on freeze. This had led to oil companies incurring record losses which had even started impacting their working capital.
To ease the pain, the government cut excise duty. The reduction will be adjusted against the Rs 24 a litre required increase in petrol and Rs 30 per litre hike in diesel rates warranted due to the rise in international oil prices.
International oil prices touched $119 per barrel earlier this month on the intensifying Iran war, before pulling back to around $100 a barrel.
The first signs of stress came when Nayara Energy, the country’s largest private fuel retailer, raised petrol price by Rs 5 per litre and diesel by Rs 3 a litre on Thursday. Petrol at Nayara pumps now costs Rs 100.71 a litre and diesel costs Rs 91.31 per litre.
State-owned fuel retailers, who control about 90 per cent of the market, continue to keep rates frozen. A litre of normal petrol in Delhi continues to cost Rs 94.77 at their outlets, while the same grade diesel comes for Rs 87.67 a litre.
March 27, 2026, 4:37 PM IST
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