The Centre on Monday cut the windfall profit tax on crude oil produced in the country and on exports of diesel. According to an official notification, the tax, levied in the form of Special Additional Excise Duty or SAED, on domestically produced crude oil has been reduced to Rs 1,300 from Rs 5,000 per tonne.
SAED on the export of diesel has been reduced to Rs 0.50 a litre from Rs 1 per litre. However, the levy on export of jet fuel or ATF has been hiked to Rs 1 per litre from nil earlier. SAED on petrol will continue to be zero. The new tax rates will come into effect from Tuesday.
India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax supernormal profits of energy companies. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
The reduction of windfall tax was mainly based on sofetening global oil rates since the last revision.
On July 1 last year, the government had first imposed windfall profit taxes and joined a growing number of countries that tax supernormal profits of energy firms. Export duties of Rs 6 per litre ($12 per barrel) each were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel during that period.
A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above $75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above $20 per barrel.
Global oil benchmark Brent crude climbed 0.12 per cent to $78.04 a barrel.
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