Government’s big decision on diesel and ATF! Windfall tax increased from July 16, know the direct effect of the new rates

Government diesel price hike: In view of the recent rise in global crude oil prices, India has increased the windfall tax on diesel and aviation turbine fuel (ATF) exports while reducing the tax on petrol exports.

These new tax rates announced through the notification issued by the Finance Ministry will be applicable from July 16. Tax on export of diesel has been increased from ₹8.5 per liter to ₹15.5 per liter and tax on export of ATF has been increased from ₹7.5 per liter to ₹14.5 per liter. However, the tax on export of petrol has been reduced from ₹4 per liter to ₹2.5 per litre.

This change has come after the increase in crude oil prices this month. After falling for three consecutive months through June, Brent crude prices rose by nearly 17% in July. June also saw the biggest monthly decline in the benchmark since the start of the Covid-19 pandemic in 2020.

The global benchmark rose nearly 2% to a one-month high of $84.73 a barrel on Wednesday. This happened when America resumed naval blockades involving Iran. The move has reignited concerns about crude supplies passing through the Strait of Hormuz, a vital shipping corridor that before the conflict handled about a fifth of the world’s oil supply.

Crude oil prices received support due to new geopolitical tensions and attacks on oil tankers. However, concerns about inflation and lack of global demand halted further price increases.

Disruptions like reduction in diesel supply from Russia have increased diesel refining margins, putting pressure on the fuel market. These latest changes are part of the government’s biweekly review of the ‘windfall tax’ system.

Earlier, on 1st of this month, government oil marketing companies had reduced the prices of ATF by about ₹ 5 per liter. This step was taken after the decline in global crude oil prices after geopolitical tensions subsided in West Asia.

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