Windfall Tax: There will be relief in the prices of crude oil and diesel, the government reduced the windfall tax for the third time this year.
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Windfall Tax: The Central Government has given a big relief on the prices of crude oil produced in the country. The government has reduced the windfall tax on crude oil for the third time and on other petroleum products for the second time. It is being told that a review meeting of the tax imposed on export of crude oil and products was organized by the Central Government on Monday. In this meeting, it was decided to reduce the windfall tax on crude oil and diesel produced in the country. This tax is called Special Additional Excise Duty (SAD) by the government.SAED) is charged as Rs. A notification from the Central Government said that the government has announced a reduction in the windfall profit tax applicable on domestically produced crude oil and diesel exports. This move will see a reduction in the Special Additional Excise Duty (SAED) imposed on these items. Effective today, SAED on domestically produced crude oil has been reduced from ₹5,000 per tonne to ₹1,300 per tonne. Along with this, SAED on diesel export has been reduced from ₹1 per liter to ₹0.50 per liter.
What will be the effect on ATF and petrol?
Amidst these cuts, the government has increased the levy on aviation turbine fuel (ATF) exports. The tax, which did not exist earlier, has been set at ₹1 per litre. This will also be effective from December 19. 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.
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