In a major relief oil-marketing companies (OMCs), the government on Friday drastically reduced the windfall tax on crude oil to Rs 1,700 from Rs 4,900 per tonne earlier. The changes will be applicable from Friday, December 16, 2023. The decision was taken in a review meeting held on Thursday.
This is the second time in the month that the Centre has reduced the levy initially introduced in view of super normal profits being made by oil companies in the backdrop of crude oil fluctuations in the global market in the aftermath of Russia’s invasion of Ukraine.
Also Read :Govt to unveil third, fourth tranches of sovereign gold bond scheme 2022-23 on December 19
The windfall tax or Special Additional Excise Duty (SAED) is revised every fortnight
Also Read :Bank Holidays 2023: Banks to remain closed THESE days in 2023, detailed list here
Earlier on December 1, the special excise duty was cut to Rs 4,900 per tonne from Rs 10,200 per tonne. On the same day, the SAED on diesel exports was reduced to Rs 6.5 per litre.
Also Read : Vijay Diwas 2022: Nation celebrates India’s victory over Pakistan in 1971 Bangladesh liberation war
Related video: Market Lazer: Government Slashes Windfall Tax On Crude Oil And Diesel Exports | Bazaar Open Exchange
On November 16, the additional levy on domestically produced crude oil was increased and reduced the rate on diesel exports.
Also Read : Income Tax exemption limit change from Rs 2.5 lakh to Rs 5 lakh expected from Budget 2023
Windfall tax or SAED on crude petroleum exports was introduced on July 1 to charge the industry for the large profit it has been earning through the sale of refined crude in the global market.
The Centre first imposed windfall profit taxes back in July, joining a growing number of countries that tax super normal profits of energy companies. At that time, export duties of Rs 6 per litre each were levied on petrol and aviation turbine fuel and Rs 13 a litre on diesel. A Rs 23,250 per tonne windfall profit tax on domestic crude production was also levied.
Also Read : PAN Card not mandatory, non-residents can file Form10F manually to claim lower TDS – Check last date
The windfall profit tax is computed by taking away any price that producers are getting above a threshold, the levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference between the international oil price realised and the cost. A Rs 23,250 per tonne windfall profit tax on domestic crude production was also imposed.
State-run producers such as the Oil and Natural Gas Corporation (ONGC) and Vedanta-controlled Cairn, were impacted by the windfall tax on domestic crude.
ONGC had urged the Centre 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.
