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In the fifth fortnight review, the government reduced the tax on domestically produced crude oil from Rs 13,300 per tonne to Rs 10,500 per tonne
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With the reduction in international crude rates, the government on Friday has cut windfall tax on crude produced in the country. Along with this, the duty on the export of diesel and aviation fuel (ATF) has also been reduced.
In the fifth fortnight review, the government reduced the tax on domestically produced crude oil from Rs 13,300 per tonne to Rs 10,500 per tonne.
According to the notification of the Ministry of Finance, the duty on export of diesel has been reduced from Rs 13.5 per liter to Rs 10 per litre. Also, the duty on export of aircraft fuel has been reduced from Rs 9 per liter to Rs 5 a litre. The new rates will come into effect from September 17.
Crude oil prices in the international market have come down to a six-month low. Due to this, windfall gains tax has been reduced. The average price of crude oil bought by India stood at USD 92.67 a barrel in September as against USD 97.40 a barrel in the previous month. India first imposed windfall profit tax on July 1.
With this, India joined the countries that were taxing windfall gains to energy companies. However, since then the prices of crude oil in the international market have softened. This affected the profit margins of both oil producers and refineries.
Windfall tax is levied in situations when a company or sector suddenly makes very high profits. Governments take some part of this high profit. This tax is subject to frequent changes. These are withdrawn as soon as the conditions become normal. In the last one year, there has been a sharp jump in the prices of crude oil and the prices even reached above the level of USD 100 per barrel. Due to the continuous rise in prices, companies have made sharp gains on the sale of refined products and crude, due to which the tax was imposed.