The government on Tuesday cut the windfall tax on domestically produced crude oil while increasing the rate of export of diesel and jet fuel (ATF) in line with the rise in international oil prices. The tax on crude oil produced by firms such as state-owned Oil and Natural Gas Corporation (ONGC), was cut to Rs 9,500 per tonne from Rs 11,000, beginning November 2, a government notification showed.
In the fortnightly revision of the windfall tax, the government hiked the rate on the export of diesel to Rs 13 per litre from Rs 12 per litre. The levy on jet fuel too was increased to Rs 5 a litre, from Rs 3.50. The levy on diesel includes Rs 1.50 per litre road infrastructure cess (RIC), the notification showed. When the levy was first introduced, a windfall tax on the export of petrol alongside diesel and ATF too was levied. But the tax on petrol was scrapped in subsequent fortnightly reviews.
While the windfall profit tax is calculated 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. India first imposed windfall profit taxes on July 1, joining a growing number of nations that tax super normal profits of energy companies.
At that time, export duties of Rs 6 per litre (USD 12 per barrel) each were levied on petrol and aviation turbine fuel and Rs 13 a litre (USD 26 a barrel) on diesel. A Rs 23,250 per tonne (USD 40 per barrel) windfall profit tax on domestic crude production was also levied. The duties were partially adjusted in the previous rounds on July 20, August 2, August 19, September 1, September 16, October 1 and October 16.
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