Govt Hikes Windfall Profit Tax On Domestically-Produced Crude Oil, Exports Of Diesel & ATF

Govt Hikes Windfall Profit Tax On Domestically-Produced Crude Oil, Exports Of Diesel & ATF

New Delhi: The Centre has hiked windfall profit tax levied on domestically-produced crude oil and export of diesel and aviation turbine fuel in line with firming international oil prices, as per an official order, reported PTI. The tax on crude oil produced by companies such as Oil and Natural Gas Corporation of India has been increased to Rs 5,050 per tonne from Rs 1,900 per tonne, the order dated February 3, said.

The new tax rates came into effect from February 4. 

The government has also increased the tax on export of diesel to Rs 7.5 per litre from Rs 5 and same on the overseas shipments of ATF to Rs 6 a litre from Rs 3.5 a litre. 

The levy on both domestic crude oil and fuel exports is now off the lows it had hit last month.

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Tax rates were slashed at the last fortnightly review on January 17, following a dip in global prices. International oil prices have since then firmed, necessitating the hike of a windfall tax.

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

A Rs 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied. 

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The export tax on petrol was scrapped in the very first review. 

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

Reliance Industries Ltd, which operates the world’s largest single-location oil refinery complex at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are primary exporters of fuel in the country.

The government levies tax on windfall profits made by oil producers on any price they get above a threshold of USD 75 per barrel.

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