The central government has announced to reduce a windfall tax on domestically produced crude oil. According to an official notification, the windfall tax on domestically produced crude oil by petroleum companies has been reduced from Rs 11,000 per tonne to Rs 9,500 per tonne.
This deduction has come into effect from Wednesday, November 2 2022. The windfall tax on the sale of domestically produced crude has been cut at a time when global oil prices remain close to $95 a barrel.
Tax Increased On Export Of Diesel-Jet Fuel Along
with cutting windfall tax on crude oil, the central government has increased duty on the export of diesel and aircraft fuel (ATF), given rising oil prices internationally. has also been announced. While the tax on the export of diesel has been increased from Rs 12 to Rs 13 per litre, the excise duty on the export of Aviation Turbine Fuel (ATF) has been increased from Rs 3.5 per litre to Rs 5 per litre.
Why is windfall profit tax imposed?
In the global market, crude oil and refinery products like petrol, diesel, and ATF keep fluctuating with time. If the prices of diesel, petrol and ATF etc., in the global market, are higher than in the domestic market, then refineries start increasing exports to make more profit.
The government imposes a windfall profit tax to curb this and ensure availability in the domestic market. The same calculation applies in the case of crude oil as well. On the other hand, when their prices decrease in the global market, the companies themselves start reducing exports. In such a situation, the government decides to reduce or remove the windfall tax.
Tax Imposed For The First Time In July
The government first decided to impose a windfall profit tax on July 1, 2022. At that time, crude oil prices and other petroleum products were at their peak in the global market. However, since then, their prices have come down significantly.
Crude oil has just come down to a low of about 06 months. At that time, the government had taxed petrol at Rs 06 per litre, ATF at Rs 06 per litre, diesel at Rs 13 per litre and crude oil at the rate of Rs 23,250 per tonne.
The Review Has Been Done Twice Before
The government did the first review of windfall profit tax on July 20. In the first review, the tax on the export of petrol was removed. In the case of diesel and ATF, the tax was reduced by Rs 2-02 to Rs 11 and Rs 4 per litre, respectively.
Tax on domestic crude oil was also reduced to Rs 17,000 per tonne. Then on August 2, there was a second review. In this, the government reduced the export tax on diesel to Rs 5 per litre, while the tax on ATF was removed. In the case of crude oil, the tax was increased to Rs 17,750 per tonne.
