Fifteen days after the government had reduced the windfall tax on domestically produced crude oil in India to zero, the Centre has now again imposed the duty. The duty rate has now been fixed at Rs 6,400 per tonne, whereas the export duty on diesel has been removed.
In the previous revision on April 4, the Centre had reduced the windfall tax on crude oil production to zero from Rs 3,500 per tonne.
According to the latest official notification issued on Tuesday, the special additional excise duty (SAED) on petrol will continue to be zero. The SEAD on diesel has also been cut to zero on Tuesday, against Rs 0.50 per litre earlier.
The rise in windfall tax on crude oil comes after international crude oil has risen after the OPEC and its allies announced to cut production recently.
The Brent crude oil currently stands at $84.76 a barrel. The contract posted its fourth weekly gain in a row last week, the longest such streak since mid-2022. The Indian basket was at $73-74 per barrel for most of the second half of last month and had brightened prospects of a cut in petrol and diesel prices.
The tax rates on the crude oil, export duties on diesel and petrol are reviewed every fortnight, on the basis of average crude oil prices in the previous two weeks.
Petrol and diesel prices in India are also reviewed on a daily basis based on the crude oil prices.
What Is Windfall Tax?
A windfall tax is a one-off tax imposed by a government on a company. It is levied on an unforeseen or unexpectedly large profit, especially unfairly obtained. Now, international crude prices have risen sharply in recent months. The domestic crude producers sell crude to domestic refineries at international parity prices. As a result, domestic crude producers are making windfall gains.
The government had imposed the tax in July last year — a cess of Rs 23,250 per tonne was imposed on crude oil production in India. 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 domestic crude production was also levied.
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