Govt scraps windfall tax on petroleum crude as global prices cool

Crude oil

The Union government has cut the windfall tax on petroleum crude to zero from 1,850 rupees per metric ton, effective from September 18, a notification issued on September 17 showed.

The government reviews the windfall tax every fortnight, and the cut comes after a significant decline in crude prices. As per the last revision on August 30, the government had slashed windfall tax on domestically produced crude oil by 11.9 percent to Rs 1,850 per tonne from previous Rs 2,100 per tonne, effective from August 31.

This is the second time since the windfall tax was imposed that it has been set to zero.

Global benchmark Brent crude prices have fallen to below $75 a barrel from over $92 a barrel in April.

Petroleum Secretary Pankaj Jain had said on September 12 that the Oil Ministry has been in talks with the Finance Ministry regarding the windfall tax, and the Department of Revenue will take a final decision in this regard. Both ministries will continue to engage in this matter, he said.

Jain acknowledged that oil prices have been cooling off in the last 7-10 days and it needs to be seen for how long global prices stay subdued, as it may not be prudent to decide based only on one week's price movement.

(With Reuters inputs)