The Indian government on December 1 stated that it has further cut windfall tax on locally produced oil and diesel exports.
The windfall tax on locally produced oil has been cut to Rs 4,900 per tonne. while that on diesel exports has been reduced to Rs 6.5 per litre.
Changes to the windfall tax will be effective from Friday, the order said.
Windfall tax or the special additional excise duty (SAED) on crude petroleum exports was introduced by the government on July 1 to charge the industry for the large profit it has been earning through the sale of refined crude in the international market. Its quantum is reviewed at every fortnight.
India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies.
At that time, export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and aviation turbine fuel and Rs 13 a litre (USD 26 a barrel) on diesel.
A Rs 23,250 per tonne ($40 per barrel) windfall profit tax on domestic crude production was also levied.
Producers, including state-owned Oil and Natural Gas Corporation (ONGC) and Vedanta-controlled Cairn, were impacted by the windfall tax on domestic crude.
ONGC had urged the government to withdraw profit tax on domestically produced crude oil and instead use the dividend route to tap into the bumper earnings resulting from a surge in global energy prices, news agency PTI had reported earlier.
However, Union Minister for Petroleum and Natural Gas Hardeep Singh Puri had said that windfall tax was under the purview of the finance ministry and the ministry would continue to review it at every fortnight.
Meanwhile, former Revenue Secretary Tarun Bajaj recently told CNBC-TV18 that windfall gains tax, which is imposed on crude petroleum exports, will be slashed or scrapped as the global oil prices decelerate.
“As the prices come down, the windfall taxes will either reduce or go away,” Bajaj told the news channel.
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