Govt reduces windfall tax on crude oil to Rs 10,500 from Rs 13,000/tonne

(Representative Image)

The Indian government has reduced windfall tax on locally produced crude oil to Rs 10,500 from Rs 13,000/tonne, according to a circular issued by Ministry of Finance on September 16. Additionally, it has also reduced tax  export of diesel and ATF.

The decision came at the fifth fortnightly review after the Centre was "satisfied that it is necessary in the public interest to do so." The notification will come into force from tomorrow September 17 .

The cess on the export of diesel was reduced to Rs 6.50 per litre from Rs 13.5, while the tax on Aviation Turbine Fuel (ATF) exports was cut to Rs 8.5 a litre, from Rs 9 per litre, according to the circular.

The change in windfall tax on crude, export duty on petrol, diesel and ATF comes after the announcement was made for the first time on June 30.

International oil prices have fallen to six-month lows this month, leading to a reduction in the windfall profit tax.

The basket of crude oil that India buys has averaged $92.67 per barrel in September as against $97.40 in the previous month.

India had first imposed windfall taxes on July 1, joining a growing number of nations that taxes super normal profits of energy companies. But international oil prices have cooled since then, eroding profit margins at both oil producers and refiners.

On July 1, export duties of Rs 6 per litre ($12 per barrel) were levied on petrol and ATF and a Rs 13 a litre tax on export of diesel ($26 a barrel). The Rs 23,250 per tonne windfall tax on domestic crude production ($40 per barrel) was also levied.

The duties were partially adjusted in the previous four rounds on July 20, August 2, August 19 and September 1, and were removed for petrol.