The Union government on Friday slashed the windfall tax on domestically produced crude oil and diesel effective December 16, 2022.
The Ministry of Finance slashed the tax on crude oil produced by firms such as state-owned Oil and Natural Gas Corporation (ONGC) to Rs 1,700 per tonne from the existing Rs 4,900 per tonne, a government notification said. The ministry also cut the rate on diesel exports to Rs 5 per litre from Rs 8 per litre in the fortnightly revision of the windfall profit tax.
The windfall tax on aviation fuel ATF has been reduced to Rs 1.5 per litre from Rs 5 per litre, the notification said.
The Centre has been revising the windfall tax almost every two weeks since it was introduced on July 1. At that time, the Centre levied duties of Rs 6 per litre ($12 per barrel) each on petrol and ATF and Rs 13 a litre ($26 a barrel) on diesel. A Rs 23,250 per tonne ($40 per barrel) windfall profit tax on domestic crude production was also levied.
After today’s revision, the windfall tax on domestically-produced crude oil has been lowered by almost 65 per cent.
While 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.
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