BackCentre re-introduces windfall tax on crude oil
The Centre has also lowered special additional excise duty on export of diesel, which was 50 paise/litre since 4 April, to zero. There is no windfall tax on export of petrol and jet fuel now
PremiumNew Delhi: The Central Board of Indirect Taxes and Customs (CBIC) has re-introduced windfall tax on crude oil, a fortnight after bringing it down to zero, according to an official order.
The new rate of ₹6,400 a tonne kicks in from Wednesday. The tax that is meant to mop up a part of the super profits that producers make in the time of global price surge is revised every fortnight.
The Centre has also lowered special additional excise duty on export of diesel, which was 50 paise a litre since 4 April, to zero, showed a separate order. There is no windfall tax on export of petrol and jet fuel now. The decisions are taken in public interest, the orders said.
Official data showed that the Indian basket of crude, which represents prices of Oman and Dubai for sour grades and Brent for sweet grade and averaged at $78.5 in March, has since gone up to $85.64 a barrel so far in April. The basket was at $ 86.09 a barrel on Monday, according to Petroleum Planning and Analysis Cell.
Since India follows trade parity pricing of crude oil and petrol, producers of crude oil and refineries that sell finished products, realize global prices in local market. So windfall tax on profits of crude oil producers and that of refiners on exported products enable government to share a part of the gain from a surge in global prices.
The re-imposition of the windfall tax comes in the backdrop of the surge in crude oil prices in the past fortnight. On the heels of the last revision of the windfall tax, Opec+, the alliance of Organization of the Petroleum Exporting Countries (Opec) and its allies including Russia decided to go ahead with additional output cut of around 1.16 million barrels per day starting May. According to estimates, the additional reduction would bring the total volume of cuts of Opec+ to around 3.66 million barrels per day (bpd).
This pushed up crude prices to over $85 per barrel, leading analysts to raise concerns that crude prices may again hit $100 per barrel mark. Although, they have not increased significantly after the steep surge, prices have remained elevated over concerns of supply crunch following output cuts and a likely economic recovery in China, one of the largest importers of crude oil. China's GDP grew faster than expected in the first quarter of 2023. Official data showed that the Chinese economy expanded by 4.5% year-on-year.
Around 10.24 am, the June contract of Brent on the Intercontinental Exchange was trading at $84.68 per barrel, lower by just 0.11% from its previous close. The May contract of West Texas Intermediate (WTI) was at $80.78 a barrel, lower by 0.10% from its previous close.
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