Home / News / India /  Windfall profit tax cut on domestic crude oil, diesel; scrapped for ATF from today

The government at the sixth fortnightly review, has cut a windfall tax on domestically produced crude oil to 8,000 rupees per tonne from 10,500 rupees per tonne from Sunday, after a decline in global oil prices.

The government has also scrapped an export tax on jet fuel and halved export duties on diesel to 5 rupees per litre from Sunday, a government notification said.

The cut was in line with a fall in international rates, and scrapped the levy on the export of jet fuel with effect from today, according to a finance ministry notification issued late Saturday night.

The reduction in the tax rates follows the easing of crude oil prices in international markets.India imposed a windfall tax on oil producers in July amid claims the industry was making abnormal profits due to a spike in global crude prices.

While private refiners Reliance Industries Limited and Rosneft-based Nayara Energy are the principal exporters of fuels like diesel and ATF, the windfall levy on domestic crude targets producers like state-owned Oil and Natural Gas Corporation (ONGC) and Vedanta Limited.

India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies. But international oil prices have cooled since then, eroding the profit margins of both oil producers and refiners.

Export duties of 6 per litre (USD 12 per barrel) were levied on petrol and ATF and 13 a litre (USD 26 a barrel) on diesel.

A 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied.

The duties were partially adjusted in the previous five rounds on July 20, August 2, August 19, September 1 and September 16 and were removed for petrol. 

FM Nirmala Sitharaman on windfall tax

Finance minister Nirmala Sitharaman last month said windfall tax on petroleum products, crude is not ad hoc, but being charged in regular consultation with the industry.

Addressing an event organized online, the minister said it is unfair to call windfall tax as ad hoc, because the tax rate and its resetting are done in complete consultations with the industry.

"The very idea was implemented after taking the industry into full confidence," she said at a function organized by Elara Capital.

"When we suggested the idea we had told the industry that the tax rate will be reviewed every 15 days and we have been doing that," Sitharaman said.

 

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout