India To Revoke Windfall Tax If Oil Prices Fall $40 A Barrel: Revenue Secretary Tarun Bajaj
The tax on companies that have increased product exports to gain from higher overseas margins took effect on July 1, as the central government moves to boost domestic supply and revenue
Revenue Secretary Tarun Bajaj has on Monday said that India will only withdraw its windfall tax introduced last week for oil producers and refiners if global prices of crude fall as much as $40 a barrel from present levels, Reuters reported.
According to the report, the tax on companies that have increased product exports to gain from higher overseas margins took effect on July 1, as the central government moves to boost domestic supply and revenue.
The windfall taxes and some accompanying export restrictions will hit the earnings of companies such as Reliance Industries, Nayara Energy, which is partly owned by Russia’s Rosneft, the Oil and Natural Gas Corp, Oil India Ltd, and Vedanta Ltd.
Bajaj said, “The taxation would be reviewed every 15 days.” He mentioned that it would depend on international crude prices.
“If crude prices fall, then windfall gains will cease and windfall taxes would also be removed. The government believes such windfall gains will cease once prices fall $40 from existing levels,” Bajaj added.
According to the notification by Finance Ministry, the government imposed a Rs 6 per litre tax on export of petrol and ATF and Rs 13 per litre tax on export of diesel. Additionally, it levied a Rs 23,250 per tonne additional tax on crude oil produced domestically.
Brent crude futures slipped on Monday to about $111.27 a barrel, as fears of a global recession weighed on the market even as supply remains tight amid lower OPEC output, unrest in Libya and sanctions on Russia.
US West Texas Intermediate crude futures were at $108.09 a barrel.
The revenue secretary did not provide any estimate of the revenue increase for the government from its windfall tax move.
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