Windfall tax to continue for now; collections likely at ₹25,000 cr this year
The government levies tax on windfall profits made by oil producers on any price they get above a threshold of $75 per barrel.
The seven-month-old windfall profit tax on domestically produced crude oil and export of fuel is likely to give about ₹25,000 crore in the current fiscal ending March 31 said top government officials.
The levy will continue for now as international oil prices are up again, said the government official reported PTI.
"As of now, crude prices are again on the rise. So, for time being windfall tax will continue," CBIC chairman Vivek Johri told PTI.
Revenue Secretary Sanjay Malhotra said the budget has estimated collection from windfall tax at ₹25,000 crore in the current fiscal.
As the geopolitical situation continues to be volatile, Johri said it would be "difficult to predict how long the windfall taxes will continue".
India first imposed windfall profit taxes on July 1, 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 windfall profit tax of ₹23,250 per tonne ($40 per barrel) was levied on domestic crude production.
The levy is reviewed every fortnight and rates are moderated based on international oil prices.
The windfall tax on crude oil produced by companies, such as Oil and Natural Gas Corporation (ONGC), is currently ₹1,900 per tonne.
The tax on the export of diesel is ₹5 per litre and that on overseas shipments of ATF is ₹3.5 a litre.
The export tax on petrol was scrapped in the very first review.
The government 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.
Johri said two rounds of excise duty cut on petrol and diesel to cool retail prices have led to a substantial drop in excise collection in the current 2022-23 fiscal year. "Because of the duty cuts, the RE is lower than BE."
For the current fiscal, the revised estimates pegged excise mop up lower at ₹3.20 lakh crore against ₹3.35 lakh crore targeted in the Budget last year.
For 2023-24, the collection has been pegged at ₹3.39 lakh crore.
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First Published:2 Feb 2023, 10:24 PM IST
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