The Union government has slashed windfall tax on domestically produced crude oil to Rs 2,100 per tonne from previous Rs 4,600 per tonne.
Windfall tax on export of diesel and aviation turbine fuel (ATF) has been kept at nil.
Earlier on July 31, special additional excise duty (SAED) or windfall tax was lowered by 34.3 percent to Rs 4,600 per tonne on crude oil from Rs 7,000 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.
Crude oil prices have been trading below $80 per barrel amid demand worries from China, the largest oil consumer in the world and fading tensions in the Middle East.
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