The government has decided to raise the windfall tax on petroleum crude to Rs 3,200 per tonne, up from the previous Rs 1,700, effective immediately. However, the windfall tax rates for diesel and aviation turbine fuel remain unchanged at zero.

This decision comes after a recent reduction in the windfall tax on petroleum crude from Rs 2,300 per tonne to Rs 1,700 on January 16.

Since July 2022, India has been imposing a windfall tax on crude oil producers. This tax has been extended to exports of gasoline, diesel, and aviation fuel. The move was prompted by private refiners seeking to capitalize on robust refining margins by selling fuel overseas instead of domestically.

On January 2, the government had increased the windfall tax on domestically produced crude oil while eliminating the levy on diesel and aviation turbine fuel exports. The Special Additional Excise Duty (SAED) on domestically produced crude oil was raised to Rs 2,300 per tonne from Rs 1,300, as per an official notification. Additionally, the SAED on diesel exports was reduced to zero from Rs 0.50 per litre.

India joined several other nations in imposing windfall profit taxes on energy companies starting July 1, 2022. The tax rates are subject to fortnightly reviews based on average oil prices in the preceding two weeks.

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