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Business News/ Markets / Commodities/  Govt hikes windfall tax on domestic crude sales to 4,900 per tonne
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Govt hikes windfall tax on domestic crude sales to ₹4,900 per tonne

The tax on petrol, diesel, and aviation turbine fuel remains unchanged zero.

On Friday, oil prices edged lower but were on track for an over 3% gain for the week, boosted by the International Energy Agency raising its 2024 oil demand forecast and an unexpected decline in US stockpiles. (Image: Pixabay)Premium
On Friday, oil prices edged lower but were on track for an over 3% gain for the week, boosted by the International Energy Agency raising its 2024 oil demand forecast and an unexpected decline in US stockpiles. (Image: Pixabay)

The finance ministry on Friday raised the windfall tax on sale of domestic crude oil to 4,900 per tonne, effective 16 March. The revision marks an increase from the previous two weeks' special additional excise duty (SAED) of 4,600 per tonne.

The export tax on petrol, diesel, and aviation turbine fuel remains at zero.

The increase in the levy comes amid volatility in global crude prices due to geopolitical tensions. Ukraine's attacks on Russian oil refineries this week had led to a 2% surge in crude prices on Wednesday.

On Friday, oil prices edged lower but were on track for an over 3% gain for the week, boosted by the International Energy Agency raising its 2024 oil demand forecast and an unexpected decline in US stockpiles.

Brent traded at $85 a barrel, down 0.49% from previous close.

As of 14 March, the Indian crude basket, which comprises both sour grade (Oman & Dubai average) and sweet grade (Brent Dated) crude oil processed in Indian refineries, was priced at $84.50 per barrel. The basket has averaged at $83.19 per barrel so far in March, an increase from February's $81.62 per barrel.

The government first introduced windfall taxes on the sale of domestically produced crude oil in July 2022. This move came as companies involved in exploration and production benefited significantly from the surge in crude oil prices following Russia's invasion of Ukraine.

Additionally, the government imposed an extra levy on the export of petrol, diesel, and jet fuel to address the tendency of private refiners to favour international markets over domestic ones due to more attractive pricing abroad.

These levies are reviewed every fortnight based on average oil prices in the previous two weeks.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) expects robust demand in 2024 and 2025. In its latest monthly report, OPEC said that world oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025.

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ABOUT THE AUTHOR
Rituraj Baruah
Rituraj Baruah is a special correspondent covering energy, housing, urban affairs, heavy industries and small businesses at Mint. He has reported on diverse sectors over the last eight years including, commodities and stocks market, insolvency and real estate; with previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.
Catch all the Commodity News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
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Published: 15 Mar 2024, 09:20 PM IST
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