NEW DELHI: The government has cut the windfall profit tax levied on domestically-produced crude oil and also on the export of diesel and Aviation Turbine Fuel, in line with softening international oil prices, said an official order.
As per January 16 directive, the tax on crude oil produced by firms like Oil and Natural Gas Corporation (ONGC) has been reduced from Rs. 2,100 per tonne to Rs. 1,900 per tonne.
Crude oil is refined and transformed into fuels like petrol, diesel, and aircraft turbine fuel after being extracted from the earth and from the seabed (ATF).
Also, the government has lowered the duty on diesel exports from Rs. 6.5 per litre to Rs. 5 per litre and the tax on shipments of ATF to foreign countries from Rs. 4.5 per litre to Rs. 3.5 per litre. The revised tax rates go into effect on January 17.
Since the new charge was instituted in July 2022, the windfall profit tax on domestically produced crude oil is at its second-lowest level. In the second fortnight of December 2022, the tax had decreased to Rs. 1,700 per tonne. The tax on diesel exports is now equal to the lowest hit in the first halves of August, October, and December 2022. At the most recent fortnightly review on January 3, tax rates were raised in response to a firming of oil prices around the world. Since then, there has been a decline in global oil prices, forcing a reduction in the windfall tax.
On July 1, India introduced its first windfall profit tax, joining an increasing number of countries that tax energy companies' higher-than-average profits. At the time, export taxes on peterol, ATF, and diesel were each charged at Rs. 6 per litre ($12 per barrel), and at Rs. 13 per litre ($26 per barrel).
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