India has cut the windfall tax on petroleum crude to zero from Rs 4,100 ($50.13) per tonne. The cut will be effective Tuesday onwards, a government notification stated.
Earlier in May, the windfall tax on domestic crude oil was slashed to Rs 4,100 per tonne from Rs 6,400 per tonne. Whereas, the government left the windfall tax on petrol, diesel, and aviation turbine fuel (ATF) unchanged at zero.
Previously, the government announced the reimposition of the windfall profit tax on domestically produced oil from zero to Rs 6,400 per tonne. The government also scrapped the export duty on diesel.
Based on the average oil prices in the last two weeks, the tax rates are reviewed every 15 days.
The windfall profit tax is calculated by taking away any price that the producers are being paid above a set limit.
India, in July 2022, joined a growing number of nations that tax the super-normal profits of energy companies. It had imposed the windfall tax on crude oil producers and extended the levy on exports of gasoline, diesel, and ATF after private refiners wanted to make gains from robust refining margins in overseas markets.
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Levying of the windfall profit tax was expected to compensate for the reduction in the excise duty on diesel and petrol and to provide some relief to the consumers. However, the reduction in the windfall tax from the initial levels is expected to reduce the realisation for the government.
The windfall tax levy on domestically produced crude oil targets producers like Vedanta Limited, and Oil and Natural Gas Corporation (ONGC), according to an ET report.
(With inputs from agencies)
