Govt lowers windfall tax on crude to Rs 1,300/tonne from Rs 5,000/tonne; effective from today

The Centre on Monday slashed the windfall tax on crude oil from Rs 5,000 per tonne to Rs 1,300 per tonne. The windfall tax on diesel was cut to Rs 0.5 per litre from Rs 1 per litre, according to a government notification.

Meanwhile, the windfall tax on aviation turbine fuel or ATF has been hiked to Rs 1 per litre from nil earlier.

The new rates come into effect from Tuesday (December 19).

In July 2022, India first imposed a windfall tax on crude oil producers and extended the levy on exports of gasoline, diesel and aviation fuel as private refiners wanted to sell fuel overseas to make gains from robust refining margins instead of selling locally.

The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.

The tax on domestically produced crude oil was lowered to Rs 5,000 per tonne from Rs 6,300 per tonne, an official notification on November 30 said, which came into effect from December 1.

In November, the Centre had slashed the windfall tax on crude oil from Rs 9,800 per tonne to Rs 6,300 per tonne. The windfall tax on diesel was cut from Rs 2 per litre to Rs 1.

A windfall tax is levied on domestic crude oil if the rates of the global benchmark rise above $75 per barrel. Export of fuel -- diesel, aviation turbine fuel (ATF) and petrol -- attract the tax if product cracks (or margins) rise above $20 per barrel.

To ensure that domestic tax rates remain in step with global oil prices, the Centre reviews these rates every fortnight.

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