Govt removes windfall tax on crude production

Government has cut its windfall tax on crude oil production to nil from 3,500 rupees ($42.56) a tonne effective from Tuesday, according to a government notification.

Furthermore, Special Additional Excise Duty on the export of diesel has also been reduced to Rs 0.5 per litre from Re 1 per litre earlier.

India in July imposed a windfall tax on crude oil producers and on exports of gasoline, diesel and aviation fuel, to encourage private refiners to sell fuel products domestically instead of shipping them overseas to take advantage of robust refining margins in global markets.

A windfall tax is a higher tax rate levied by governments against certain industries when economic conditions allow those industries to attract above-average profits.

India first imposed windfall gains tax on July 1. At the time, export duties of Rs 6 per litre each were levied on petrol and ATF and Rs 13 per litre on diesel. Rs 23,250 per tonne windfall profit tax on domestic crude production was also levied. Windfall profit taxes are reviewed on a fortnightly basis by factoring in international oil prices.

The government intends to withdraw the windfall tax once global crude oil prices fall firmly below $70 a barrel, a top government official told Reuters last year.

Brent crude oil prices LCOc1 slipped last month near $70 a barrel, a 15-month low, on fears of weakening demand but this week surged above $85 after the OPEC+ group's decision to curtail production.

(With agency inputs)

Also Read: India’s GDP growth likely to moderate to 6.3% in FY24, says latest World Bank report

Also Read: March auto sales: Passenger vehicle sales rise 14% YoY due to festive season, says FADA

Also Read: Haj pilgrimage 2023: Govt to issue forex card, mandatory insurance to pilgrims this year

Watch: Post office small savings schemes: Revised interest rates for April-June quarter