Govt hikes windfall profit tax on diesel export; cut on domestic crude oil

NEW DELHI: The government on Thursday,  raised the windfall profit tax on diesel exports to Rs 7 per litre while lowering the charge on domestically produced crude oil. The government also reinstated the export tariff on jet fuel.

On the export of diesel, the windfall profit tax was raised from Rs 5 per litre to Rs 7 per litre. According to a notification from the Ministry of Finance, the government has introduced a Rs 2 per litre tax on ATF exports in the fortnightly review. This follows the government's earlier this month repeal of the windfall profit tax on ATF. The tax on crude oil produced domestically has been reduced from Rs 17,750 per tonne to Rs 13,000 per tonne.

While margins increased and the tax on exports was increased, the tax on locally produced oil was decreased as global oil prices fell to a six-month low.

Nations impose windfall taxes on energy company earnings that are above average. The first windfall profit tax was introduced by India on July 1, but since then, the price of oil has decreased internationally, reducing the profit margins of both oil producers and refiners. Therefore, the government decided to eliminate the ATF windfall profit tax.

On July 1, export taxes of Rs. 13 per litre for fuel and ATF and Rs. 6 per litre (USD 12 per barrel) for gasoline and ATF were imposed (USD 26 a barrel). On domestic crude output, a windfall profit tax of Rs 23,250 per tonne (about USD 40 per barrel) was also imposed.

Following that, on July 20, during the first fortnightly review, the Rs 6 per litre export duty on petro was scrapped, and the Rs 11 and Rs 4 export taxes on diesel and jet fuel (ATF), respectively, were reduced by Rs 2 per litre . The tax on domestically produced crude was also cut to Rs 17,000 per tonne.

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