Government reduces tax on domestically-produced crude oil

The decision came after the fifth fortnightly review of windfall taxes conducted by the Centre

September 17, 2022

Oil slips to six-month low

The government on Friday cut the windfall tax levied on locally- produced crude oil from Rs.13,300 per tonne to Rs.10,500 per tonne. The decision came after the fifth fortnightly review of windfall taxes conducted by the Centre. The notification will come into force on September 17.

The government also cut tax on Aviation Turbine Fuel (ATF) exports to Rs.8.50 per liter from Rs.9 per liter, according to a gazette notification. Similarly, the cess on the export of diesel was slashed to Rs.6.50 per liter from Rs.13.50 per liter.

International oil prices have fallen to six-month lows this month, leading to a reduction in the windfall profit tax. The basket of crude oil that India buys has averaged USD 92.67 per barrel in September as against $97.40 in the previous month.

While private refiners Reliance Industries Ltd and Rosneft-based Nayara Energy are the principal exporters of fuels like diesel and ATF, the windfall levy on domestic crude targets producers like state-owned Oil and Natural Gas Corporation (ONGC) and Vedanta Ltd.

India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies. But international oil prices have cooled since then, eroding the profit margins of both oil producers and refiners.

Export duties of Rs.6 per liter (USD 12 per barrel) were levied on petrol and aviation turbine fuel and Rs.13 a liter (USD 26 a barrel) on diesel.

An Rs.23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied.

The duties were partially adjusted in the previous four rounds on July 20, August 2, August 19, and September 1, and were removed for petrol.

[With Inputs from IANS]

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