India Cuts Windfall Tax On Diesel And ATF, Raises Duty On Local Crude Oil
India has cut windfall tax on diesel and aviation turbine fuel but raised the duty on domestically produced crude oil.
The government has cut windfall tax on diesel and aviation turbine fuel, in line with softening international petroleum product prices, but raised the duty on domestically produced crude oil.
While the tax on export of diesel was cut to Rs 5/litre from Rs 11/litre, that on jet fuel was scrapped, an official notification showed. Export of petrol will continue to attract nil tax. The tax on domestically produced crude oil was hiked to Rs 17,750/tonne from Rs 17,000/tonne, a move that will hit producers like Oil and Natural Gas Corp. Ltd. and Vedanta Ltd.
India first imposed windfall taxes on July 1, joining a growing number of nations that taxed super normal profits of energy firm. Global crude oil prices have cooled since then, eroding profit margins.
On July 1, export duties of Rs 6/litre ($12/barrel) were levied on petrol and ATF and a Rs 13/litre tax on export of diesel ($26/barrel). The Rs 23,250 per tonne windfall tax on domestic crude production ($40/barrel) was also levied.
Thereafter, in the first fortnightly review on July 20, the Rs 6/litre export duty on petrol was scrapped, the tax on the export of diesel and jet fuel was cut by Rs 2/litre each to Rs 11 and Rs 4, respectively. The tax on domestically produced crude was also cut to Rs 17,000/tonne.
Now, the export tax on diesel and ATF has been cut following a drop in refinery cracks or margins. But the levy on domestically produced crude oil has been raised in line with marginal increase in international crude prices.