The government imposed a windfall tax of Rs. 66,000 crore on locally produced crude oil on Friday after some refineries generated "phenomenal profits" by exporting petrol and diesel at the expense of domestic supplies.
A Rs 6 per litre tax on export of petrol and Aviation Turbine Fuels and Rs 13 per litre tax on export of diesels effective from July 1, finance ministry notifications read. Additionally, a Rs 23,250 per tonne tax was levied on crude oil produced domestically, which at last year's production level of close to 29 million tonnes translates into annual revenue of Rs 66,000 crore to the government.
Assuming the trend of exporting 5.7 million tonnes of diesel and 2.5 million tonnes of petrol in the first 2 months of the fiscal that started in April 2022 continues for the full fiscal, the revenue from the windfall tax on crude and the export levy should neutralize the Rs 1 lakh cr hit the government took when it rolled back the pandemic-era increase in excise duty on petrol and diesel.
The export tax is to deter companies such as Reliance Industries and Rosneft-based Nayara Energy from preferring overseas markets over domestic supplies. Given reasons for the introduction of the new levies, Finance Minister Nirmala Sitharaman said "phenomenal profits" earned from abnormal prices that refiners earned from shipping overseas led to the new taxes.