Center hikes windfall profit tax on crude oil; cut rate on export of diesel

According to a government notification, the tax was hiked on crude oil produced by firms such as state-owned Oil and Natural Gas Corporation (ONGC). 10,200 per ton, from 9,500 per ton, with effect from 17 November.

The windfall tax, imposed in the form of special additional excise duty, is aimed at absorbing the super profits earned by domestic crude oil producers and is revised every fortnight.

In fortnightly revision of windfall tax, government cuts rate on export of diesel 10.5 per litre, from 13 per litre. Includes levy on diesel 1.50 per liter road infrastructure cess.

See also: Explained: What is a windfall tax?

Export tax on jet fuel or ATF, which was prescribed There has been no change in Rs 5 per liter in the last review on November 1.

When the levy was first introduced, a windfall tax was levied on exports of petrol along with diesel and ATF. But in the subsequent fortnightly review, the tax on petrol was removed.

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 the crack, or margin, that refiners earn on overseas shipments. These margins are mainly the difference between international oil price and cost.

India imposed a windfall profits tax on July 1 for the first time, joining a growing number of countries that tax the super ordinary profits of energy companies. At that time, the export duty of Rs 6 per liter (USD 12 per barrel) each was imposed on petrol and aviation turbine fuel and 13 per liter (US$26 per barrel) on diesel. a A windfall profit tax of 23,250 per tonne (USD 40 per barrel) was also imposed on domestic crude oil production.

In the previous rounds, duties were partially adjusted on July 20, August 2, August 19, September 1, September 16, October 1, October 16 and November 1.

(With inputs from PTI)