The government has increased the windfall tax on domestically produced crude oil to Rs 6,000 per tonne, up from the previous Rs 3,250 per tonne, effective immediately from Tuesday. This hike is levied as a Special Additional Excise Duty (SAED). According to an official notification, the SAED on the export of diesel, petrol, and jet fuel (ATF) will remain at 'nil.'
India initially introduced windfall profit taxes on July 1, 2022, aligning with several other nations that impose taxes on the excessive profits of energy companies. The tax rates undergo a review every fortnight, determined by the average oil prices over the preceding two weeks.
Earlier on June 15, the government reduced the windfall tax on petroleum crude from Rs 5,200 to Rs 3,250 ($38.90) per metric tonne.
In July 2022, India introduced a taxation regime targeting crude oil production and the export of gasoline, diesel, and aviation fuel. This initiative aimed to regulate the substantial profits accrued by oil production companies during a period of elevated crude oil prices, driven primarily by geopolitical events such as Russia's invasion of Ukraine.
The measure sought to ensure that India's refining sector contributes effectively to the nation's economic goals while maintaining stability in fuel availability and pricing within the country.
Typically, the windfall tax is implemented when global benchmark rates for domestic crude oil exceed $75 per barrel. For exports of diesel, aviation turbine fuel (ATF), and petrol, the tax applies when product margins surpass $20 per barrel.
The tax is imposed in the form of Special Additional Excise Duty (SAED), with the SAED on export of diesel, petrol, and jet fuel or ATF remaining at nil, according to the official notification.