Govt cut excise duty on Petrol, Diesel by ₹10

In a major move to contain the domestic fallout from the West Asia energy crisis, the Government of India has announced a deep cut in excise duties on petrol and diesel. According to a Finance Ministry notification issued late on March 26, the Special Additional Excise Duty (SAED) on both fuels has been slashed by ₹10 per litre each.

The intervention is designed to act as a “fiscal cushion” for state-run Oil Marketing Companies (OMCs) like IOCL, BPCL, and HPCL, preventing them from passing on the massive spike in global crude costs—which recently touched $122/barrel—directly to the common man.

1. New Tax Structure (Effective Immediately)

The reduction brings the central tax component on fuel to its lowest level in several years.

2. Will Pump Prices Actually Drop?

Despite the ₹10 tax cut, retail prices at most petrol pumps are staying the same today. Here is why you might not see a cheaper bill:

• Absorbing Losses: OMCs were reportedly losing nearly ₹24/litre on petrol and ₹30/litre on diesel due to the frozen retail rates during the Iran conflict. The government’s ₹10 cut helps these companies recover a portion of those losses rather than lowering the price for consumers.
• Price Stability: Petroleum Minister Hardeep Singh Puri clarified that the move is intended to insulate citizens from international volatility, essentially choosing to “take a hit on government finances” to keep domestic prices stable while they “skyrocket” in other nations.
• Private vs. Public: While state-owned firms are holding prices steady, private player Nayara Energy actually raised its prices by ₹5 per litre for petrol and ₹3 per litre for diesel just 24 hours before this order.

3. The “Export Tax” Counter-Measure

To ensure that the newly subsidized fuel stays within India, the government simultaneously imposed heavy windfall taxes on exports:

• Diesel Export Tax: Set at ₹21.5 per litre.
• ATF Export Tax: Set at ₹29.5 per litre.
• The Goal: Finance Minister Nirmala Sitharaman noted that these levies will ensure “adequate availability” for domestic consumption, preventing refiners from chasing higher profits in international markets during the shortage.

4. Aviation Turbine Fuel (ATF) Revision

The aviation sector received a more complex update to help manage the crisis:

• A new base excise duty of ₹50 per litre was introduced.
• However, built-in exemptions have capped the effective rate at ₹29.5 per litre in most cases, aimed at preventing a total collapse in domestic flight connectivity.

5. Current Fuel Rates (Major Cities – March 27, 2026)

As state-run OMCs have opted to absorb the tax cut to offset their losses, retail rates remain unchanged from yesterday: