Govt removes windfall tax on crude oil production, slashes it on diesel

Govt cuts all windfall tax on crude

Government has cut windfall tax on crude oil production to nil from 3,500 rupees ($42.56) per tonne effective from Tuesday, according to a government notification.

The windfall tax on diesel has been slashed to Rs 0.5 per litre from Re 1 per litre earlier. There is no windfall tax on petroleum and ATF.

Windfall tax is levied by governments when an industry unexpectedly earns large profits. The tax was levied in July last year as high energy prices led to soaring profits for oil producers.

Since then, windfall taxes for crude oil have declined from Rs 23,250 per tonne in July 2022 to Rs 3,500 per tonne as of 21 March 2023, mimicking Brent Crude Oil prices.

The decision comes at a time when the OPEC+ decided to cut production.  The move led to Brent rising by almost 6 per cent to USD 84.58 per barrel on Monday.

This spurt will reverse the softening in rates witnessed in the basket of crude oil that India imports. The Indian basket was hovering in the range of USD 73-74 per barrel for most of the second half of last month and had brightened prospects of a cut in petrol and diesel prices.

(With agency inputs)