WindFall Tax: Government gave a blow to domestic oil companies, then increased the tax, slight relief on diesel-ATF
[ad_1]
WindFall Tax: The Central Government has given a blow to the domestic oil producing companies on the New Year. The government has increased it to Rs 2,300 per tonne. This decision has been taken by the government in the meeting organized to review the windfall tax imposed on the export of petroleum products. Whereas, giving relief to the struggling airlines companies, the tax on Aviation Turbine Fuel (ATF) has been reduced. Besides, the tax on diesel has also been reduced. The government has reduced the price of aviation fuel by Rs 4,162.5 i.e. 3.9 percent. After this cut, the price of aviation fuel in Delhi has become Rs 1,01,993.17 per kilolitre. This is the third consecutive month when the price of aviation fuel has been reduced. Earlier, in November, the price of ATF was reduced by about six percent (Rs 6,854.25 per kiloliter). Whereas in December it was reduced by 5,189.25 i.e. 4.6 percent. ATF accounts for approximately 40 percent of the operating cost of an airline.
How much has the windfall tax reduced?
According to the notification of the Central Government, the windfall tax on crude oil has been increased by Rs 1,000 per tonne. Earlier, tax on oil was Rs 1300 per tonne, whereas now Rs 2300 will be charged. While giving relief to diesel consumers, the government has abolished the tax of Rs 0.5 per liter on diesel. Earlier in the meeting held on December 19, the government had announced a cut in the windfall profit tax applicable on domestically produced crude oil and diesel exports. This move saw a reduction in the Special Additional Excise Duty (SAED) imposed on these items. The government had reduced SAED on domestically produced crude oil from ₹5,000 per tonne to ₹1,300 per tonne. Additionally, SAED on diesel exports was reduced from ₹1 per liter to ₹0.50 per litre.
What will be the effect on ATF and petrol?
Amidst these cuts, the government has increased the cost of aviation turbine fuel (ATF).atf) Levy on exports has been increased. The tax, which did not exist earlier, has been set at ₹1 per litre. This will also be effective from January 1. This simply means that airplane fuel has become expensive. Its effect may again be visible on air fares. Whereas, on the contrary, SAED on petrol will remain at the rate of zero and will be unaffected by these changes.
Updates take place in 15 days
The windfall tax is revised every 15 days based on fluctuations in international crude oil and product prices. Earlier, on December 1, the government had announced reduction in windfall tax on crude petroleum from ₹6,300 per tonne to ₹5,000 per tonne. Additionally, during the last review on November 16, the government had reduced the windfall tax on crude petroleum by ₹3,500 from ₹9,800 per tonne to ₹6,300 per tonne. This was in line with the declining trend in global oil prices. Whereas, on November 1, the government had increased the tax on crude oil from Rs 9,050 per tonne to Rs 9,800 per tonne. Subsequently, duty on diesel exports was halved to ₹2/litre, while duty on jet fuel was abolished, bringing it down from ₹1/litre to zero. After this it was understood that the air fare would come down like before. But today again the tax on ATF has increased.
What is windfall tax?
India initially imposed the windfall tax in July 2022 in response to rising crude oil prices. This tax is imposed by governments when an industry makes unexpected substantial profits, which is usually attributed to some unprecedented event. A windfall tax is imposed on domestically produced crude oil when global benchmark rates exceed $75 per barrel. For exports of diesel, ATF and petrol, the levy applies when the product is cracked, or the margin exceeds $20 per barrel. Product margins or margins represent the difference between the cost of crude oil (raw material) and the value of finished petroleum products. Major players in fuel exports to India include Reliance Industries Ltd, which operates the world’s largest single-site oil refinery complex at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy.
[ad_2]
Source link
