In a move responding to the downward trend in global oil prices, the government announced a significant reduction in the windfall profit tax on domestically produced crude oil and diesel exports.

According to official reports, the Special Additional Excise Duty (SAED) on crude oil has been decreased from Rs. 9,800 per tonne to Rs. 6,300 per tonne. Simultaneously, the SAED on diesel exports has been revised downward from Rs. 2 per litre to Re 1 per litre.

Additionally, there will be no changes in the duty for the export of aviation turbine fuel (ATF) and petrol, with the duty remaining at zero as per the latest decision. These revised tax rates came into effect on Thursday.

This reduction in tax rates follows a previous adjustment made on November 1, where the government increased the tax on crude oil from Rs. 9,050 per tonne to Rs. 9,800 per tonne. Subsequently, the duty on diesel exports was halved to Rs. 2 per litre, while the levy on jet fuel was eliminated, dropping it from Re 1 per litre to nil.

The need for this reduction arose due to the decline in international oil prices. India's monthly average for imported crude oil stood at USD 84.78 per barrel, down from USD 90.08 per barrel in October and USD 93.54 per barrel in September.

The windfall profit taxes were initially implemented in July of the previous year in alignment with a global trend aimed at taxing supernormal profits of energy companies. During the initial implementation, export duties of Rs. 6 per litre (USD 12 per barrel) were imposed on both petrol and aviation turbine fuel (ATF), along with Rs. 13 per litre (USD 26 per barrel) on diesel.

Moreover, a windfall profit tax of Rs. 23,250 per tonne (USD 40 per barrel) was levied on crude oil produced by companies like Oil and Natural Gas Corporation (ONGC).

The tax rates are reviewed every fortnight based on the average oil prices over the previous two weeks. The windfall tax is imposed when global benchmark rates exceed USD 75 per barrel for domestically produced crude oil and when product cracks or margins surpass USD 20 per barrel for diesel, aviation turbine fuel (ATF), and petrol exports.

Notably, the levy on domestic crude oil had dropped to nil in the first half of April due to falling international crude oil prices but was reinstated in the latter half following a rise in rates. Similar fluctuations were observed in the tax on diesel and aviation turbine fuel (ATF) throughout the year. However, the export tax on petrol was initially abolished in the review process.

Russian Ruble Strengthens Against US Dollar Amid New Sanctions