The government has cut its windfall tax on crude oil and exports of aviation turbine fuel (ATF) and diesel, according to a notification on Monday. It cut its windfall tax on crude to Rs 1,900 ($23.28) per tonne from Rs 2,100 per tonne, effective Tuesday.
The Centre also cut export tax on ATF to Rs 3.5 per litre from Rs 4.5 per litre, and cut export tax on diesel to Rs 5 per litre from Rs 6.5 per litre, the notification said.
India, a major consumer and importer of oil, has been buying Russian crude at well below a $60 price cap agreed by the West. India in July imposed the windfall tax on crude oil producers and levies on exports of gasoline, diesel and aviation fuel after private refiners sought overseas markets to gain from robust refining margins, instead of selling more cheaply at home.
The government in the first week of January raised windfall profit tax levied on domestically produced crude oil as well as on the export of diesel and aviation turbine (ATF) in line with firming global oil prices.
The levy on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been increased to Rs 2,100 per tonne from Rs 1,700 per tonne, the order dated January 2, said.
Crude oil pumped out of the ground and from below the seabed is refined and converted into fuel like petrol, diesel and aviation turbine fuel (ATF). The government has also raised the tax on the export of diesel to Rs 6.5 per litre, from Rs 5 and the same on overseas shipments of ATF to Rs 4.5 a litre, from Rs 1.5 a litre. The new tax rates are effective from January 3.
Tax rates were cut at the last fortnightly review on December 16, following a decline in global crude oil prices. International oil prices have since then firmed up, necessitating the raising of windfall tax.