The export duty on diesel and ATF is the lowest since the tax was imposed in July last year. Photo has been used for representation only. file | Photo Credit: AP
According to an official order, the government reduced the windfall profit tax on exports of diesel to a minimum of Rs 0.50 per liter and that on jet fuel (ATF) to zero, while marginally increasing the levy on domestically produced crude oil.
The duty on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) has been increased from Rs 4,350 per tonne to Rs 4,400 per tonne, the March 3 order said.
Crude oil is extracted from the land and from the bottom of the sea, refined and converted into fuels such as petrol, diesel and Aviation Turbine Fuel (ATF).
The government has reduced the tax on export of diesel from Rs 2.5 to Rs 0.5 per litre, and on foreign shipments of ATF to nil from Rs 1.50 per litre.
The order states that the new tax rates will be effective from March 4.
This is the second rate cut in a fortnight. The rates were cut on 16 February.
The export duty on diesel and ATF is the lowest since the tax was imposed in July last year.
The tax rates are reviewed every fortnight based on the average oil prices in the preceding two weeks.
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, an export duty of Rs 6 per liter ($12 per barrel) was imposed on petrol and ATF and Rs 13 per liter ($26 per barrel) on diesel.
A windfall profit tax of ₹23,250 per tonne ($40 per barrel) was also imposed on domestic crude oil production.
Export tax on petrol was abolished in the very first review.
Reliance Industries Ltd., which operates the world’s largest single-location oil refinery complex at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are the primary exporters of the fuel in the country.
The government imposes a windfall profit tax on any price realized by oil producers above a cap of $75 a barrel.
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 the price and cost of oil internationally.