The Centre on July 1 raised taxes on the export of petrol, diesel, and aviation turbine fuel (ATF), along with the announcement of an additional windfall tax on gains made by domestic refineries.
The government slapped a Rs 6 per litre tax on exports of petrol and ATF and Rs 13 per litre on exports of diesel.
It also imposed Rs 23,230 per tonne additional tax on domestically produced crude oil to take away windfall gains accruing to producers from high international oil prices, a separate government notification showed.
"Crude prices have risen sharply in recent months. The domestic crude producers sell crude to domestic refineries at international parity prices. As a result, the domestic crude producers are making windfall gains,” the government said. “This cess will have no adverse impact, whatsoever, on domestic petroleum products prices.”
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Export-focused refineries have been exempted from the cess notification regarding domestic sales. The mandate demands that exporters sell 30 percent of their diesel output locally, first.
Moreover, small producers, whose annual production of crude in the preceding financial year is less than 2 million barrels, will also be exempt from this cess.
Also, to incentivise production, no cess will be imposed on quantity of crude that is produced in excess of last year’s production by a crude producer, the government said.
The tax on fuel exports comes in the wake of rising exports of high speed diesel and petrol that have spiked.
“As exports are becoming highly remunerative, it has been seen that certain refiners are drying out their pumps in the domestic market,” the government said.
Reliance Industries' shares slumped 7 per cent to trade at Rs 2,400 level, its largest fall since December 2021.
Mangalore Refinery and Chennai Petroleum were also down about 8 per cent each. Both stocks had gained recently thanks to the improving outlook on exports of petroleum products.
The tax on exports follows oil refiners, particularly the private sector, reaping huge gains from exporting fuel to markets such as Europe and the US.Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.