In response to rising global oil prices, the Central government on Thursday reduced the windfall profit tax assessed on locally produced crude oil as well as on the export of diesel and aviation turbine fuel (ATF).
According to the decision, the tax on crude oil produced by firms like Oil and Natural Gas Corporation (ONGC) has been reduced from Rs 5,050 per tonne to Rs 4,350 per tonne.
Additionally, the government reduced the tax on fuel exports from Rs 7.50 per liter to Rs 2.50 per liter. There is still no particular supplementary excise charge on gasoline.
The duty on ATF exports has also been reduced from Rs 6 per litre to Rs 1.50 per litre.
On February 16, the new tax rates went into effect
Crude oil is refined and transformed into fuels like gasoline, diesel, and ATF after it is extracted from the earth and the ocean floor.
On July 1, 2022, India implemented windfall profit taxes for the first time, joining an increasing number of countries that tax energy businesses' higher-than-average profits. At the time, export taxes on gasoline, ATF, and diesel were Rs 6 per litre ($12 per barrel) each and Rs 13 per litre ($26 per barrel).
Every two weeks, the levy is reviewed, and rates are adjusted in accordance with market oil prices.
The country's main fuel exporters are Reliance Industries Ltd., which has the largest single-location oil refinery complex in the world at Jamnagar, Gujarat, and Nayara Energy, which is supported by Rosneft.
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 petroleum 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.
(To receive our E-paper on WhatsApp daily, please click here. To receive it on Telegram, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)