The Union government has 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.
Windfall tax on export of diesel and aviation turbine fuel (ATF) has been retained at nil.
Earlier on August 16, special additional excise duty (SAED) or windfall tax was lowered by 54.3 percent to Rs 2,100 per tonne on crude oil from Rs 4,600 while tax on diesel and ATF was left unchanged at zero.
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 is revised every fortnight based on the movement of international crude and product prices. A windfall tax is levied by governments when an industry unexpectedly earns large profits — primarily due to an unprecedented event.
Oil prices fell on August 30 and was on track for a weekly decline, weighed by concerns of more supply entering the market from OPEC+, while Libyan output disruptions put a floor on prices.
Brent crude futures for October delivery, which expire on Friday, were down $1.10, or 1.38 percent, at $78.84 a barrel by 11:34 a.m. EDT, Reuters reported. U.S. West Texas Intermediate crude futures slipped $1.95, or 2.57 percent, to $73.96.
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