Centre hikes windfall tax on crude oil, export of diesel, ATF
2 min read . Updated: 05 Feb 2023, 11:10 AM IST
Premium- The new tax rates came into effect from Saturday, 4 February
In line with firming global oil prices, the Central Government has raised the seven-month-old windfall profit tax levied on domestically-produced crude oil as well as on the export of diesel and aviation turbine fuel (ATF), an official statement dated 3 February stated.
According to the notice, the levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been hiked to ₹5,050 per tonne from ₹1,900 per tonne.
Crude oil pumped out of the ground and from below the seabed is refined and converted into fuels such as petrol, diesel and ATF.
The Centre has also raised the tax on export of diesel to ₹7.5 per litre from ₹5, and the same on overseas shipments of ATF to ₹6 a litre from ₹3.5 a litre.
The new tax rates came into effect from Saturday, 4 February.
The levy on both domestic crude oil and fuel exports is now off the lows it had hit last month.
Windfall tax to continue for now
Top government officials have said thay windfall profit tax on domestically produced crude oil and export of fuel is expected to give about ₹25,000 crore in the current fiscal ending 31 March, 2023.
The levy will continue for now as international oil prices are up again, an official was quoted as saying by PTI.
During the last fortnightly review on 17 January, tax rates were cut following softening in international oil prices. Global oil prices have since then firmed, necessitating the hike of a windfall tax.
The country had first imposed windfall profit taxes on 1 July last year, 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 ATF 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 export tax on petrol was scrapped in the very first review.
Based on average oil prices in the previous two weeks, the tax rates are reviewed every fortnight.
Reliance Industries, which operates the world's largest single-location oil refinery complex at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are primary exporters of fuel in India.
The Centre levies tax on windfall profits made by oil producers on any price they get above a threshold of $75 per barrel.
The levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference between the international oil price realised and the cost.
With agency inputs
