Windfall tax increased, Diesel export tax cut

New Delhi, Nov 17: The Central government has hiked the windfall tax on domestically produced crude oil while reducing the rate of export of diesel. The change is effective from today i.e. 17 November, a government notification showed.

 

 

 

As per the government notification, the tax on crude oil produced by firms such as state-owned Oil and Natural Gas Corporation (ONGC), was hiked to ₹10,200 per tonne, from ₹9,500 per tonne, with effect from November 17.

 

 

 

The windfall tax levied as special additional excise duty is aimed at absorbing the super-profits earned by domestic crude oil producers and is revised every fortnight. In the fortnightly revision of the windfall tax, the government cut the rate on the export of diesel to ₹10.5 per liter, from ₹13 per liter. The levy on diesel includes ₹1.50 per liter road infrastructure cess. The export tax on jet fuel or ATF, which was set at ₹5 a liter in the last review on November 1, has not been altered. When the levy was first introduced, a windfall tax on the export of petrol alongside diesel and ATF too was levied. But the tax on petrol was scrapped in subsequent fortnightly reviews. While the windfall profit tax is calculated by taking away any price that producers are getting above a threshold, the levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference between the international oil price realized and the cost. India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies. At that time, export duties of ₹6 per liter (USD 12 per barrel) each were levied on petrol and aviation turbine fuel and ₹13 a liter (USD 26 a barrel) on diesel. A ₹23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied.

 

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The duties were partially adjusted in the previous rounds on July 20, August 2, August 19, September 1, September 16, October 1, October 16, and November 1.