Government raises windfall profit tax on crude oil

17 Nov 2022 , 10:34 AM

The windfall tax on domestically produced crude oil has been increased by the central government, but the rate on diesel exports has decreased. According to a government notification, the modification will take effect today, November 17, 2022.

According to a government announcement, the tax on crude oil produced by companies like the state-owned Oil and Natural Gas Corporation (ONGC) increased to Rs10,200 per ton on November 17 from Rs9,500 per ton.

The windfall tax, which is assessed as unique supplementary excise duty, is periodically updated to account for the super profits made by domestic crude oil companies.

In the bi-weekly modification of the windfall tax, the government reduced the rate on diesel export from Rs13 to Rs10.5 per litre. The road infrastructure cess in the diesel tax is Rs1.50 per litre.

The jet fuel (ATF) export tax which was fixed at Rs5 per litre in the most recent review on November 1 has not changed.

While the tax on windfall profits is determined by deducting any price that producers receive above a certain level, the charge on fuel exports is determined by the cracks or margins that refiners make on international shipments. These margins essentially reflect the difference between the realised international oil price and the price.

On July 1, export taxes on gasoline and aviation turbine fuel were each Rs6 per litre (USD 12 per barrel), while export taxes on diesel were Rs13 per litre (USD 26 per barrel). Additionally, a windfall profit tax of Rs23,250 per ton (USD 40 per barrel) was imposed on local crude output.

On July 20, August 2, August 19, September 1, September 16, October 1, October 16, and November 1st, the duties were modified in part.

For feedback and suggestions, write to us at [e-mail]