Government hikes windfall tax on diesel and domestic crude oil

17 Oct 2022 , 07:59 AM

On Saturday, the government increased the windfall profit tax on diesel exports to Rs12 per litre and from Rs0 to Rs3.50 per litre for aviation turbine fuel.

In accordance with the escalating global oil prices, the government has increased the tax on domestically produced crude oil by Rs3,000 per tonne to Rs11,000 per tonne.

According to a statement from the finance ministry, at the seventh fortnightly review, the government increased the windfall profit tax on diesel exports from Rs6.5 per litre to Rs12 per litre and reinstated the charge on ATF (Aviation Turbine Fuel) exports at Rs3.50 per litre from nil.

The revised adjustments will take effect on October 16th.

After cutting the tax rates for two consecutive fortnights in order to coincide with the decline in the price of petroleum internationally, the finance ministry has increased export taxes on crude, diesel, and ATF.

While the main exporters of fuels like diesel and ATF are private refiners Reliance Industries Ltd and Rosneft-based Nayara Energy, the windfall duty on domestic crude targets producers like the state-owned Oil and Natural Gas Corporation (ONGC) and Vedanta Ltd.

In response to the windfall gains made by domestic crude producers and refiners as a result of the high global crude and product prices, India initially enacted windfall profit taxes on July 1.

The administration had stated that it will evaluate the windfall tax on domestic crude oil every two weeks.

The fee was supposed to relieve consumers by making up for the decrease in the excise duty on gasoline and diesel. However, it is anticipated that the government’s revenue will decrease due to the windfall cess’s decline from its initial levels.

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