The Centre on Friday cut the windfall profit tax on domestically produced crude oil and also reduced the levy on aviation turbine fuel exports. The revised tax rates become effective from December 16, 2022.
The tax on crude oil produced by local firms has been reduced to Rs 1,700 per tonne from the existing Rs 4,900 per tonne, as per government notification.
Meanwhile, the windfall tax on aviation turbine fuel has been reduced from Rs 5 per litre from to Rs 1.5 per litre, as per the notification.
The special additional excise duty on petrol continues to remain unchanged at ‘Nil’, while windfall tax on high-speed diesel for exports has been reduced to Rs 5 per litre from Rs 8 earlier.
The move comes amid a 14% slump in global crude since November. India is the world’s third largest consumer and importer of oil.
Windfall profit tax is calculated by taking away any price that producers are getting above a threshold.
Starting July 1, India imposed the windfall profit tax, joining a growing number of nations that tax super normal profits of energy companies. While duties were slapped on the export of petrol, diesel and jet fuel (ATF), a Special Additional Excise Duty (SAED) was levied on locally produced crude oil.
The government has maintained that the levy was introduced in view of the windfall gains made by the domestic crude producers and refiners due to high global crude and product prices.
The government had said it will review the windfall levy on locally produced crude oil every fortnight.
The levy was expected to compensate for the reduction in the excise duty on petrol and diesel to provide relief to consumers. But the reduction in the windfall cess from the initial levels is expected to reduce the realization for the government.
Private refiners Reliance Industries Ltd and Rosneft-based Nayara Energy are the primary exporters of fuels like diesel and ATF. The windfall levy on domestic crude aims producers such as state-run Oil and Natural Gas Corporation (ONGC) and Vedanta Ltd.
Also Read:
The panel, which submitted its report to the oil ministry last week, has recommended benchmarking price of natural gas produced from ONGC and OIL’s legacy or old fields, called APM gas, at 10 per cent of cost of crude oil imported into India, according to a copy of the report seen by PTI.
As the world and India embark on decarbonization initiatives, the only carbon free fuel which can help achieve net-zero emission objectives is Hydrogen, said V.K. Saraswat, Member, NITI Aayog at the second day of ET EnergyWorld Annual Gas Conclave on Tuesday.