New Delhi: The Union government has reduced windfall tax on domestically produced crude oil. The windfall tax is slashed by 34.2% to Rs 4,600 per tone.Earlier, the windfall tax was at Rs 7,000 per tonne. There will be no windfall tax on export of diesel and aviation turbine fuel (ATF).
Previously, the government raised the windfall tax on petroleum crude by 16.66 per cent to Rs 7,000 per tonne, from Rs 6,000 per tonne on July 15.
The windfall tax is imposed in the form of a Special Additional Excise Duty (SAED). India started taxing crude oil production and exports of gasoline, diesel and aviation fuel in July 2022 to regulate private refiners which wanted to sell fuel overseas instead of locally in a bid to gain from robust refining margins.
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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. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
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