Windfall tax on petroleum crude slashed to ’zero’ with effect from THIS date; Diesel, ATF retained at nil

The government has scrapped the windfall tax on domestically produced crude oil with effect from September 18. The windfall tax on domestically produced crude oil will be zero, the government said in a notification on Tuesday, September 17.

The windfall tax is revised every 15 days based on the average oil prices in two weeks. It is charged as Special Additional Excise Duty (SAED), which is a tax on the profit made from domestically produced crude oil.

The last revision of the windfall tax, effective August 31,on crude petroleum was set at ₹1,850 per tonne.

The SAED on the export of diesel, petrol and jet fuel or ATF, has been kept as ‘nil’ as per the new notification. This new revision comes after a major decline in crude oil prices.

This is the second time from the time when the windfall tax was imposed that it has been brought down to nil. On April 4, 2023, the government had reduced the windfall tax to nil for the first time.

Crude oil prices

On Tuesday, crude oil prices increased by a dollar a barrel due to supply chain issues, and traders estimate that demand will grow if the US Federal Reserve lowers borrowing costs this week.

Over 12 per cent of crude production from the US Gulf of Mexico was offline last week due to Hurricane Francine. This has increased oil prices in three of the past four sessions, an increase after Brent hit the lowest in nearly three years last week. US crude oil futures gained $1.31, or 1.9 per cent, to $71.40, whereas Brent crude futures rose by $1, or 1.4 per cent, to $73.75 per barrel.
 

The government started imposing a windfall tax on crude oil companies in July 2022—this tax covered gasoline, diesel, and aviation fuel exports to control extreme profits.

Recently, Petroleum Secretary Pankaj Jain said that the Oil Ministry had discussions with the Department of Revenue to decide on windfall taxes, which the Department of Revenue currently manages.