Government increases windfall tax on petroleum crude by 41% from April 16

Govt raises windfall tax on petroleum crude

The Indian government has announced an increase in windfall tax on petroleum crude from 6,800 rupees to 9,600 rupees per metric ton. This change will come into effect on April 16, as part of the government's fortnightly revision of the tax. However, diesel and aviation turbine fuel will remain unaffected and will continue to have a zero windfall tax rate.

On April 4, the government raised the windfall tax on petroleum crude from 4,900 rupees to 6,800 rupees per metric ton. The tax was initially introduced in July 2022 to regulate private refiners who were exporting fuel overseas to benefit from higher refining margins instead of selling it locally.

Before this, on March 15, 2024, the Finance Ministry increased the windfall tax on the sale of crude oil produced domestically to Rs 4,900 per tonne. This was an increase from the previous special additional excise duty (SAED) of Rs 4,600 per tonne that was in effect for the previous two weeks.

In July 2022, the Indian government introduced a windfall tax that targeted crude oil producers. Later, this tax was expanded to include gasoline, diesel, and aviation turbine fuel (ATF) exports. The primary objective of this policy is to discourage private refiners from selling these fuels abroad at higher global prices and instead prioritize the domestic market supply. The windfall tax rate is adjusted by the government every two weeks.

This increase in windfall tax on petroleum crude is aimed at ensuring that private refiners do not prioritize exports over the domestic market.