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regular-article-logo Thursday, 22 February 2024

Government cuts windfall profit tax on crude oil produced in the country to Rs 6,700 per tonne

New tax rates came into effect from Saturday, the order dated late last night said

Our Special Correspondent New Delhi Published 03.09.23, 10:19 AM

The government has cut the windfall profit tax on crude oil produced in the country to Rs 6,700 per tonne from Rs 7,100 a tonne, a finance ministry notification said.

The tax, levied in the form of special additional excise duty or SAED, on the export of diesel was increased to Rs 6 per litre from Rs 5.50 a litre and on jet fuel or ATF to Rs 4 per litre from Rs 2, it added.

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SAED on export of petrol will continue to be zero.

The new tax rates came into effect from Saturday, the order dated late last night said.

India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax supernormal profits of energy companies. At that time, export duties of Rs 6 per litre ($12 per barrel) each were levied on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel.

A Rs 23,250 per tonne ($40 per barrel) windfall profit tax on crude oil produced by companies such as ONGC was also levied.

The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.

A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above $75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above $20 per barrel.

Product margins are the difference between crude oil (raw material) and finished petroleum products.

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