The government on Thursday cut windfall profit tax on exports of crude oil and diesel produced in the country following softening international oil prices.
According to an official notification, the tax levied as Special Additional Excise Duty ( Windfall Tax ) on domestic crude oil production has been reduced from Rs 9,800 per tonne to Rs 6,300 per tonne.
SAED on export of diesel was reduced from Rs 2 per liter to Rs 1 per litre. At the same time, this duty on export of jet fuel i.e. ATF and petrol will remain zero. The new tax rates came into effect from Thursday.
Windfall tax was amended on 1 November
The windfall profit tax has been amended on the first date of November i.e. 1st November 2023. On November 1, the government had increased the tax on crude oil from Rs 9,050 per tonne to Rs 9,800 per tonne. Along with this, the levy on export of diesel was halved to Rs 2 and the levy on jet fuel was reduced from Rs 1 per liter to zero.
International oil prices have softened since the last revision. After this the government has decided to cut. The average price of the basket of crude oil imported by India stood at US$ 84.78 per barrel this month, compared to US$ 90.08 per barrel in October and US$ 93.54 per barrel in September.
India first imposed windfall gains tax on July 1 last year. It joins a growing number of countries that tax energy companies’ extraordinary profits. At that time, export duty of Rs 6 per liter (US$12 per barrel) was imposed on petrol and ATF and Rs 13 per liter (US$26 per barrel) on diesel.
A windfall profit tax of Rs 23,250 per tonne (US$40 per barrel) was also imposed on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC). The tax rates are reviewed every 15 days based on the average oil prices over the last two weeks.
A windfall tax is imposed on domestic crude if global benchmark rates rise above US$75 a barrel. At the same time, when the export margin of diesel, ATF and petrol goes above US $ 20 per barrel, then a levy is imposed on it.
Let us tell you that it is the difference between crude oil (raw material) and finished petroleum product margin.
