Centre Slashes Windfall Tax On Crude Petroleum, Diesel And ATF

The levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been cut to Rs4,350 per tonne from Rs5,050 per tonne

The windfall profit tax levied on domestically-produced crude petroleum has been slashed on the back of global oil prices firming up

Source : Getty

The Centre on Thursday slashed the windfall profit tax levied on domestically-produced crude petroleum and reduced the special additional excise duty on diesel and aviation turbine fuel (ATF), according to the government notification, reported news agency Reuters.

The levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been cut to Rs 4,350 per tonne from Rs 5,050 per tonne, according to the Economic Times report that cited the notification. The tax on the export of diesel has been reduced to Rs 2.50 per litre from Rs 7.5 a litre while the special additional excise duty on petrol continues to be nil.

The reduction in taxes comes in line with the firming global oil prices. Meanwhile, the tax on overseas shipments of ATF has been cut to Rs1.50 per litre from Rs6 a litre. The government reviews the taxes every fortnight and rates are moderated based on international oil prices.

All these new tax rates will come into effect from Thursday. The windfall profit taxes were first imposed on July 1, 2022, as India joined a growing number of nations that tax super normal profits of energy companies. At that time, petrol and ATF attracted export duties of Rs6 per litre ($12 per barrel) each, and Rs13 a litre ($26 a barrel) was levied on diesel.

The government levies a tax on windfall profits made by oil producers on any price they get above a threshold of $75 per barrel.

Windfall tax is levied by governments when an industry unexpectedly earns large profits — primarily due to an unprecedented event. The seven-month-old windfall profit tax on domestically produced crude oil and export of fuel is likely to give about Rs 25,000 crore in the current fiscal ending March 31 and the levy will continue for now as international oil prices are up again, the news agency PTI reported earlier citing top government officials.

"As of now, crude prices are again on the rise. So, for the time being, windfall tax will continue," CBIC chairman Vivek Johri told PTI.