The finance ministry will take a decision on scrapping the windfall tax on local crude oil output, according to Tarun Kapoor, advisor to Prime Minister Narendra Modi, on Wednesday.
The windfall tax on crude oil was introduced in 2022 to address excessive profits during periods of high prices. Kapoor noted that since global oil prices have significantly softened, the tax may no longer be necessary.
“The finance ministry will take a view… I think the petroleum ministry has already written to them,” Kapoor said.
What is the windfall tax on crude, and why was it introduced?
The Centre introduced the windfall tax on domestically produced crude oil on July 1, 2022, in response to rising global prices driven by uncertainties. Finance Minister Nirmala Sitharaman had stated that the move aimed to curb “phenomenal profits” made by some oil refiners who were exporting fuel at the expense of domestic supplies. At the same time, the Centre also introduced an additional tax on refined products such as petrol, diesel, and aviation fuel.