In the last two weeks, the government has increased the windfall tax on locally produced crude oil sales from 1,700 to 2,100 per tonne. With immediate effect from Tuesday, the raise in special additional excise duty on diesel exports is to 6.5 cents a litre from 5 cents. This also includes the tax of 1.5 per litre.
There is an additional excise duty of 4.5 cents per litre on the export of aviation turbine fuel (ATF) which was previously 1.5 cents. There is still no windfall tax on petrol exports. It comes at a time when the global oil market has been largely volatile amid supply concerns from Russia and concerns about fading Chinese demand.
Current Scenario:
The price of a barrel of Brent crude is approximately $85 as opposed to $80 two weeks ago. The March contract on the ICE was trading at $85.78 per barrel at 11.30 a.m., down 0.15% from its previous close. West Texas Intermediate (WTI) for February on the NYMEX decreased 0.10% to $80.18 per barrel.
Following a drop in global oil prices, the government reduced the windfall profit tax assessed on locally produced crude oil as well as on the export of diesel and aviation fuel on December 16.
Reliance Industries Ltd., which manages India’s largest only-for-export oil refinery at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are preliminary exporters of fuel in the whole nation.
As oil-producing firms were generating enormous profits as a result of high oil prices, the tax on windfall gains was initially enacted on July 1. Export taxes of six cents per litre were in place at the time.
The calculated tax on petroleum exports is based on the margins or cracks that refiners make from international shipments. These margins essentially reflect the discrepancy between the realized international oil price and the price paid.
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