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The Central government has raised the windfall tax on crude oil by about 37% to 11,000 per tonne as part of the fortnightly revision in the rate, said a person familiar with the decision.

At present, the windfall tax on petroleum levied in the form of special additional excise duty is 8,000 a tonne.

The special additional excise duty on aviation turbine fuel (ATF) has also been increased from nil to 3.5 a litre. The government also increased the special additional excise duty on export of diesel from 5 a litre to 10.5 a litre taking the total excise duty on export of diesel to 12 per litre including the Rs1.50 per litre road and infrastructure cess.

The changes are effective from Sunday. Price changes are part of the fortnightly revision of the tax rate as per global trends.

The increase in windfall tax and export duties comes despite a continued subdued trend in the global prices. Brent prices in the past two weeks have largely been volatile. Although it is now above the $90 per barrel, the trend still is tepid with fresh Covid-19 related restrictions in China and concerns of a global recession. On Friday, the December contract of Brent on the Intercontinental Exchange closed at $91.63 per barrel, lower by 3.11% from its previous close.

With a view to increase prices, OPEC+, the alliance of Organization of the Petroleum Exporting Countries and other major oil exporting countries including Russia earlier this month decided to slash production by 2 million barrels per day starting November. The move, although caused an initial rise in prices, the increased has not sustained. Going ahead, the weakness in crude prices in expected to continue with OPEC lowering demand forecast for oil in 2022 and 2023. 

ABOUT THE AUTHOR

Gireesh Chandra Prasad

Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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