Diesel windfall tax raised
The Centre on Thursday hiked the windfall profit tax on the export of diesel and brought back the tax on aviation turbine fuel but slashed the levy on domestically produced crude oil in line with softening rates.
At the third fortnightly review, the government raised the windfall profit tax on the export of diesel to Rs 7 per litre from Rs 5 a litre and brought a Rs 2 a litre tax on ATF exports, a finance ministry notification showed. Earlier this month, the government had scrapped the windfall profit tax on ATF (aviation turbine fuel) exports.
Alongside, the tax on domestically produced crude oil has been cut to Rs 13,000 per tonne from Rs 17,750, which will provide relief to producers such as Oil and Natural Gas Corporation and Vedanta.
The tax on exports has been raised as cracks or margins rose but the same on domestically produced oil was reduced as international oil prices slid to a six-month low. India first imposed windfall profit taxes on July 1, joining a growing number of nations that taxes super normal profits of energy companies.
But international oil prices have cooled since then, eroding profit margins of both oil producers and refiners. In the first fortnightly review on July 20, the Rs 6-a-litre export duty on petrol was scrapped. The tax on the export of diesel and jet fuel was cut by Rs 2 per litre each to Rs 11 and Rs 4, respectively.
The tax on domestically produced crude was also cut to Rs 17,000 per tonne. On August 3, government had increased the windfall tax on domestically produced crude to Rs 17,750 a tonne from Rs 17,000 a tonne earlier. However, the export tax on diesel and aviation turbine fuel was lowered.
While introducing the new levies, the government had said that it will review exports and imports of these items every fortnight to amend its decision. The reduction in taxes earlier this month came as India’s trade gap swelled to a record high in July as elevated commodity prices and a weak rupee inflated the country’s import bill.
The gap between exports and imports widened to $31.02 billion in July from $26.18 billion in June. Imports jumped 43.59 per cent in July from the year-ago month, while exports dropped 0.76 per cent.
Meanwhile oil prices gained about 4 per cent on Thursday as positive US economic data and robust US fuel consumption offset concerns that slowing economic growth in other countries could undercut demand. Brent futures rose 3.6 per cent, to $97.06 a barrel by 1816 GMT, while US West Texas Intermediate (WTI) crude rose 3.4 per cent, to $91.11.