New Delhi: The union government has increased the windfall tax on sale of domestic crude oil. The windfall tax is hiked to Rs 4,900 per tonne. The new rate will be effective from March 16.
The revision marks an increase from the previous two weeks’ special additional excise duty (SAED) of Rs 4,600 per tonne. The export tax on petrol, diesel, and aviation turbine fuel remains at zero.
The increase in the levy comes amid volatility in global crude prices due to geopolitical tensions. Ukraine’s attacks on Russian oil refineries this week had led to a 2% surge in crude prices on Wednesday. Brent traded at $85 a barrel, down 0.49% from previous close.
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As of 14 March, the Indian crude basket, which comprises both sour grade (Oman & Dubai average) and sweet grade (Brent Dated) crude oil processed in Indian refineries, was priced at $84.50 per barrel. The basket has averaged at $83.19 per barrel so far in March, an increase from February’s $81.62 per barrel.
India is the world’s largest consumer and importer of crude oil. The Union government in July last year imposed the windfall tax on crude oil producers and levies on exports of petrol, diesel and aviation fuel. Windfall tax is levied as a special additional excise duty which is aimed at absorbing the super-profits earned by domestic crude oil producers due to high global crude, product prices. The Union government reviews the windfall tax and associated rates in a fortnightly manner.
Crude oil pumped out of the ground and from below the seabed is refined and converted into fuels like petrol, diesel, and aviation turbine fuel (ATF).
A windfall tax is imposed on domestically produced crude oil when the rates of the global benchmark exceed $75 per barrel. For the export of diesel, aviation turbine fuel (ATF), and petrol, the levy is applicable when the product cracks, or margins, surpass $20 per barrel.
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