Govt Hikes Windfall Tax On Domestic Crude To Rs 7,000 Per Metric Tonne

This marks the second increase in the windfall tax in less than a month. Earlier on July 1, 2024, the government increased the tax from Rs 3,250 per metric tonne to Rs 6,000 per metric tonne

The windfall taxes were first introduced by the government in July, 2022, as the country joined its counterparts in imposing taxes on the excessive profits of energy firms. (Image Source: Unsplash)

Source : Unsplash

The Indian authorities announced a hike in the windfall tax on petroleum crude oil on Monday, an official notification revealed. The government increased the windfall tax to Rs 7,000 per metric tonne and the new tax rates will be effective from July 16, 2024, the notification revealed.

The earlier tax rate stood at Rs 6,000 per metric tonne, reported Moneycontrol. This tax is imposed in the form of a Special Additional Excise Duty (SAED). The notification stated that the SAED on diesel, petrol, and jet fuel (ATF) exports remains unchanged at ‘nil’.

This marks the second increase in the windfall tax in less than a month. Earlier on July 1, 2024, the government increased the tax from Rs 3,250 per metric tonne to Rs 6,000 per metric tonne. 

Last month in mid-June, the authorities reduced the windfall on crude oil from Rs 5,200 per metric tonne to Rs 3,250 per metric tonne.

The windfall taxes were first introduced by the government in July, 2022, as the country joined its counterparts in imposing taxes on the excessive profits of energy firms. These tax rates are reviewed every two weeks on the basis of the average oil prices in the preceding fortnight.

The taxes were levied to keep a tab on the surging profits accrued by oil-producing companies when crude prices hit the roof due to geopolitical events such as the Russian invasion of Ukraine.

Generally, the windfall tax is levied when the global benchmark prices for domestic crude oil surpass $75 per barrel. Tax on exports of diesel, aviation turbine fuel (ATF), and petrol are also implemented when the product margins cross $20 per barrel.

Through windfall tax, the country aims to ensure that the domestic refining industry adds to the economic growth of the nation. This also helps in stabilising the fuel availability and price at the domestic level.