The Indian government on Thursday, November 16 announced that it has slashed the windfall tax levied on crude petroleum produced in the country. According to an official notification, the Special Additional Excise Duty or SAED, has been reduced to ₹6,300 per tonne from ₹9,800 per tonne.
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SAED levied on the export of diesel was halved to ₹1 per litre from ₹2 per litre. Tax on jet fuel or Aviation Turbine Fuel (ATF) remained nil. SAED on export of petrol also continues to be zero.
The new tax rates will come into effect from today, i.e. November 16. India first introduced windfall profit taxes in July 2022. At that time, export duties of ₹6 per litre each were levied on petrol and ATF and ₹13 per litre on diesel.
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A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above $75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) — the difference between crude oil (raw material) and finished petroleum products — rise above $20 per barrel.
The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
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In the last fortnightly review on October 31, the government increased the tax on domestically produced crude oil to ₹9,800 per tonne from ₹9,050 a tonne. SAED on the export of diesel was reduced to ₹2 per litre from ₹4 per litre, while that on jet fuel or ATF was reduced to nil from ₹1.
