As crude rates skyrocketed during the Russia-Ukraine war, firms extracting oil locally in India made gains, and their rising profits also attracted taxes. Domestic oil producers hoped for a removal of windfall tax on crude oil in the Union Budget 2023, but that relief didn't come.
But now the government has lowered the levy from Rs 4,400 per tonne to Rs 3,500 tonne for crude oil, as its price has tanked by $16 per barrel following the banking crisis.
Why are firms paying windfall tax?
Last year in June, the prices had hit $124 per barrel, and from that level crude rates have now fallen to $70 per barrel.
The tax is applied on crude from the Indian seabed and the ground, which is later refined into petrol, diesel and ATF.
Previously, the centre has also been slashing windfall tax on aircraft fuel, as the aviation sector takes off towards a recovery.
What does it mean for common consumers?
Although the government didn't remove the windfall tax, it has been reducing it consistently after fortnightly reviews, with eyes on a Rs 25,000 crore collection this year.
Revenue from windfall taxes matters as it allows the government to absorb losses from reductions in excise duty and other levies, that keep petrol and diesel prices low.
The export duty on diesel has also been raised to Rs 1 from Rs 0.50 per litre.
