Narendra Mod Government Cuts Windfall Tax on Crude Oil, Export of Diesel and Aviation Turbine Fuel
New Delhi, January 17: The government has reduced the windfall profit tax levied on domestically-produced crude oil as well as on the export of diesel and ATF, in line with softening international oil prices, according to an official order.
The levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been cut to Rs 1,900 per tonne from Rs 2,100 per tonne, the order dated January 16, said. Wealth Inequality in India: India’s Richest 1% Own More Than 40% of Total Wealth, Says Oxfam Report.
Crude oil pumped out of the ground and from below the seabed is refined and converted into fuel like petrol, diesel and aviation turbine fuel (ATF).
The government has also reduced the tax on export of diesel to Rs 5 per litre, from Rs 6.5 and the same on overseas shipments of ATF to Rs 3.5 a litre, from Rs 4.5 a litre.
The new tax rates are effective from January 17. Windfall profit tax on domestically-produced crude oil is the second lowest since the new levy was introduced in July 2022. The tax had fallen to Rs 1,700 per tonne in the second fortnight of December 2022.
The levy on the export of diesel now equals the lowest hit in the first half of August and October 2022 and the second half of December 2022. Tax rates were increased at the last fortnightly review on January 3, following a firming up of global oil prices. International oil prices have since then dropped, necessitating the reduction of a windfall tax.
India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies. At that time, export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and ATF and Rs 13 a litre (USD 26 a barrel) on diesel.
A Rs 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied. The export tax on petrol was scrapped in the very first review. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks. Income Tax Slabs: Know Current Tax Rates for Individuals Under New and Old Tax Regimes Ahead of Budget 2023.
Reliance Industries Ltd, which operates the world’s largest single-location oil refinery complex at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are primary exporters of fuel in the country.
The government levies tax on windfall profits made by oil producers on any price they get above a threshold of USD 75 per barrel. The levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference between the international oil price realised and the cost.
