Government reduces windfall tax on domestic crude oil to Rs 13,000 per tonne

The government on Thursday evening increased the windfall tax on diesel exports to 7 rupees per liter from 5 rupees per liter earlier. In addition, the government has again imposed a levy of Rs 2 per liter on the export of jet fuel after removing it earlier this month.

The new changes will come into effect from August 19.

The Central Board of Excise and Customs (CBIC), in its notification, however, reduced the exceptional tax on locally produced crude oil to Rs 13,000 per ton from Rs 17,750 per ton earlier, a decision that will relieve producers like ONGC . and Vedanta Ltd.

This is the third review cycle of the new windfall tax. However, the gasoline export levy remains zero. The revision comes at a time when international oil prices fell below $90 a barrel, a six-month low.

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

Subsequently, at the first fortnightly review on July 20, the export duty of Rs 6 per liter on petrol was removed, the export tax on diesel and jet fuel was reduced by Rs 2 per liter each at Rs 11 and Rs 4, respectively. The tax on locally produced crude oil has also been reduced to Rs 17,000 per ton.

On August 3, the government had increased the exceptional tax on crude produced locally to Rs 17,750 per tonne against Rs 17,000 per tonne earlier. However, the export tax on diesel and aviation turbine fuel has been lowered, in line with falling international prices for petroleum products.

In the second revision, it had also reduced the diesel tax to Rs 5 per liter from Rs 11 per liter earlier. In addition, it also abolished the Rs 4 per liter tax on the export of aviation turbine fuel.

The new tax was imposed after domestic companies were seen to be making huge profits since global oil prices soared amid geopolitical unrest.

When the new levies were introduced, the government said it would review exports and imports of these items every fortnight in order to change its decision.

The tax cut earlier this month came as India’s trade deficit hit a record high in July as high 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. This, due to falling exports and high commodity prices, along with a weak rupee, inflates the import bill. Imports jumped 43.59% in July from the month a year earlier, while exports fell 0.76%.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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