New Delhi: The Union government on Thursday slashed the windfall profit tax on locally produced crude oil to Rs 1,700 per tonne from Rs 4,900 per tonne on domestically produced crude oil. In the fortnightly revision of the windfall profit tax, the government cut the rate on the export of diesel to Rs 5 per litre from Rs 8 per litre. The levy includes Rs 1.5 per litre as road infrastructure cess.
Tax on aviation fuel ATF is been cut to Rs 1.5 per litre. The revised tax rates become effective from today onwards.
Government slashes windfall tax on diesel, ATF | The tax on domestic crude oil export has been reduced to Rs 1,700 per tonne from the existing Rs 4,900 per tonne, as per government notification. Tax on ATF has been reduced to Rs 1.5 per litre from Rs 5 per litre. pic.twitter.com/VJeu59jkSk
— ANI (@ANI) December 16, 2022
After the latest revision, the tax on oil produced from domestic fields has been lowered by about 65 per cent.
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Windfall profit tax is usually arrived upon by taking away any price that producers are getting above a threshold while the levy on fuel exports is calculated based on cracks or margins that refiners make on overseas shipments. These margins are basically the difference between the international oil price realised and the cost.
India imposed windfall profit taxes for the first time on July 1 to join a growing number of nations that tax super normal profits of energy companies. At that time, 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. A Rs 23,250 per tonne ($40 per barrel) windfall profit tax on domestic crude production was also levied.
The government has been revising the windfall tax almost every two weeks since its introduction. Private oil companies Reliance Industries Ltd and Rosneft-based Nayara Energy are the primary exporters of fuels like diesel and ATF. The windfall levy on domestic crude impacts producers such as state-run Oil and Natural Gas Corporation (ONGC) and Vedanta Ltd.