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The Central Government on Thursday reduced to less than half the windfall tax on crude oil to 4,900 ($60.34) per tonne, as per a government order. The government has also slashed the export tax on diesel to 8 per litre. 

The changes to the windfall tax will be effective from tomorrow, the order noted.

The tax on crude oil produced by companies like state-owned Oil and Natural Gas Corporation (ONGC) has been cut to 4,900 per tonne from the existing 10,200 per tonne.

In the fortnightly revision of windfall profit tax, the government cut the rate on export of diesel to 8 per litre from 10.5 per litre. The levy includes 1.5 per litre as road infrastructure cess, , as per a government notification.

The special additional excise duty on petrol continues to remain nil and that on aviation fuel ATF at 5 a litre.

Earlier on 16 November, the government hiked windfall tax on domestically produced crude oil while reducing the rate on export of diesel.

While the windfall profit tax is calculated by taking away any price that producers are getting above a threshold, the levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference of international oil price realised and the cost.

India first imposed windfall profit taxes back in 1 July, joining a growing number of nations that tax super normal profits of energy companies. 

At that time, export duties of 6 per litre ($12 per barrel) each were levied on petrol and aviation turbine fuel and 13 a litre ($26 a barrel) on diesel. A 23,250 per tonne ($40 per barrel) windfall profit tax on domestic crude production was also levied.

The duties were partially adjusted in the previous rounds on 20 July, 2 August, 19 August, 1 September, 16 September, 1 October, 16 October, and 1 November.

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