According to a circular from the Ministry of Finance, the government has changed its windfall gains tax with effect from Saturday, February 4, 2023.
Crude Oil and Diesel
According to the Centre, the SAED on crude oil has been increased by Rs 3,150 per tonne, while the SAED on diesel and air turbine fuel (ATF) has been decreased by Rs 2.5 per litre each.
Following the amendments, SAED on crude oil will rise from the previous Rs 1,900/tonne to Rs 5,050/tonne, while the tax on diesel will rise from Rs 5/litre to Rs 7.5/litre.
Additionally, SAED on ATF will now cost Rs 6 per litre instead of Rs 3.5 per litre, while SAED on petrol remains zero.
Windfall Gains Tax
The government expects to collect Rs 25,000 crore this financial year from windfall gains tax, according to a report by CNBC-TV18.
According to the sources, the government has not prepared any estimates for next year's collections because levies are dynamic and subject to fortnightly changes.
India first imposed windfall profit taxes in 2022 July 1, joining a growing number of nations that tax super normal profits of energy companies.
At that time, export duties of Rs 6/litre (412 per barrel) each were levied on petrol and ATF, and Rs 13/litre ($26 a barrel) on diesel. A Rs 23,250/tonne ($40/barrel) windfall profit tax on domestic crude production was also levied.
Aviation Turbine Fuel
Crude oil is refined and transformed into fuels like petrol, diesel, and aircraft turbine fuel after being extracted from the earth and from the seabed (ATF).
The very first review erased the petrol export tax. Any price that oil producers receive that is more than a cap of $75 per barrel is subject to taxation by the government on their unforeseen gains.
The tax on fuel exports is calculated based on the margins or cracks that refiners make from international shipments. These margins are largely the difference between the cost and the realised international oil price.
The most recent spike occurred in October 2022 as a result of an OPEC output plan reduction that caused prices to reach a five-week high.
