Centre Cuts Windfall Tax On Crude Oil To Rs 6,300 Per Tonne, Tax On Diesel Halved

The Centre had hiked the tax on crude oil to Rs 9,800 per tonne from Rs 9,050 per tonne as per the last revision effective from November 1

The levy on the export of jet fuel or ATF and petrol will continue to be zero. The new tax rates came into effect from Thursday.

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The Centre on Thursday slashed the windfall profit tax on crude oil produced in the country and on exports of diesel in line with softening global oil prices, the PTI said. According to an official notification, the tax, levied in the form of Special Additional Excise Duty or SAED, on domestically produced crude oil has been reduced to Rs 6,300 per tonne from Rs 9,800 per tonne.

As per the report, SAED on the export of diesel was reduced to Re 1 per litre from Rs 2 per litre. The levy on the export of jet fuel or ATF and petrol will continue to be zero. The new tax rates came into effect from Thursday, the notification mentioned.

The Centre had hiked the tax on crude oil to Rs 9,800 per tonne from Rs 9,050 per tonne as per the last revision effective from November 1. The levy on the export of diesel was also halved to Rs 2 and that on jet fuel was brought to nil from Re 1 per litre.

The reduction of windfall tax was mainly based on sofetening global oil rates since the last revision. The basket of crude oil that India imports has averaged $84.78 per barrel this month as against $90.08 a barrel average in the month of October and $93.54 in September.

On July 1 last year, the government had first imposed windfall profit taxes and joined a growing number of countries that tax supernormal profits of energy firms. Export duties of Rs 6 per litre ($12 per barrel) each were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel during that period.

A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above $75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above $20 per barrel.

A Rs 23,250 per tonne ($40 per barrel) windfall profit tax on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) was also levied. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.