In a major move effective from March 26, 2026, the Government of India has slashed the central excise duty on petrol and diesel by ₹10 per litre to shield the domestic economy from a global energy crisis.
The New Tax Structure
The reduction targets the Special Additional Excise Duty (SAED), bringing it down to nearly historic lows for domestic consumption for Petrol– Reduced from ₹13 to ₹3 per litre , Diesel-Reduced from ₹10 to zero. Total Central Tax– Including other cesses, the total central tax now stands at approximately ₹11.90 for petrol and ₹7.8 for diesel
Reason of Cuting fuel exercise duty :
- The intervention was triggered by a “steep and rapid” rise in international crude prices, which surged from ~$70 to over $122 per barrel in just one month.
- The spike is largely attributed to the US-Israel-Iran conflict and the resulting near-blockade of the Strait of Hormuz, a critical route for nearly 20-40% of India’s oil imports.
- Before this cut, public sector Oil Marketing Companies (OMCs) like IOCL and BPCL were absorbing losses of roughly ₹24-26/litre on petrol and ₹30-81.90/litre on diesel
Retail pump prices are expected to remain stable rather than decrease. The duty cut is being used to offset the massive “under-recoveries” of oil companies so they don’t have to hike prices further…
Alongside the excise reduction, the Government has simultaneously introduced an export levy on diesel. At a time when international diesel prices have surged sharply, the levy is designed to disincentivise exports and ensure that refinery output is directed first towards meeting domestic demand. Keeping Indian pumps fully supplied takes precedence over export opportunities, however commercially attractive those may be at current global prices..
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