Centre hikes windfall profit tax on crude oil; cut rate on export of diesel
The Central government has hiked windfall tax on domestically produced crude oil while reducing the rate on 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 INR 10,200 per tonne, from INR 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 windfall tax, the government cut the rate on export of diesel to INR 10.5 per litre, from INR 13 per litre. The levy on diesel includes INR 1.50 per litre road infrastructure cess.
The export tax on jet fuel or ATF, which was set at INR 5 a litre in the last review on November 1, has not been altered.
When the levy was first introduced, a windfall tax on 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 of international oil price realised 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 INR 6 per litre (USD 12 per barrel) each were levied on petrol and aviation turbine fuel and INR 13 a litre (USD 26 a barrel) on diesel. A INR 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied.
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.
