Centre hikes windfall tax on crude oil to ₹6,800/tonne
The Indian government has hiked the windfall tax on domestic crude petroleum production, raising it from ₹4,900 per tonne to a staggering ₹6,800 per tonne, with effect from April 4.
The Central government on April 3 announced an increase in the windfall tax on crude petroleum to ₹6,800 per tonne from ₹4,900 per tonne, effective from April 4. This tax hike comes in the form of a Special Additional Excise Duty (SAED) levied on domestic crude oil producers.
SAED is applied to crude oil production in India. This tax is distinct from export duties on fuels like diesel, petrol, and aviation turbine fuel (ATF), which currently remain at zero.
Earlier, Finance Ministry raised the windfall tax on the sale of domestic crude oil to ₹4,900 per tonne, on March 15, 2024. This revision marked an increase from the previous two weeks' special additional excise duty (SAED) of ₹4,600 per tonne.
The Indian government implemented the windfall tax on crude oil producers in July 2022. It later extended it to exports of gasoline, diesel, and aviation turbine fuel (ATF). The policy discourages private refiners from selling these fuels overseas to profit from high global prices, ensuring they prioritize supplying to the domestic market. The government revises the windfall tax rate fortnightly.
Oil Prices Surge
Meanwhile, Global oil prices climbed on April 4, fueled by concerns about limited supply. Major producers are sticking to output cuts, while a strengthening US economy boosts demand.
Additionally, disruptions from attacks on Russian refineries and the ongoing conflict in Gaza raise the spectre of further supply issues in the Middle East.
Brent futures for June increased 15 cents (0.2 per cent), to settle at USD 89.51 per barrel at 0037 GMT. US West Texas Intermediate (WTI) futures for May increased by 15 cents (0.2 per cent), to USD 85.59 per barrel, Reuters reported.
A Bold Move
The Indian government's decision to significantly increase the windfall tax on domestically produced crude oil to ₹6,800 per tonne is seen as a bold move, aimed to cushion the blow for Indian consumers facing rising fuel costs. This tax targets the excess profits oil producers are enjoying due to the high global prices. By capturing a share of these windfall profits, the tax could lessen the burden on Indian citizens and potentially stabilize domestic fuel prices.
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Business NewsEconomyCentre hikes windfall tax on crude oil to ₹6,800/tonne
First Published:4 Apr 2024, 06:52 AM IST
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