Windfall gains tax to 'either reduce or go away' as prices come down, says Revenue Secy Tarun Bajaj

Revenue Secretary Tarun Bajaj

Windfall gains tax, which is imposed on crude petroleum exports, will be slashed or scrapped as the global oil prices decelerate, Revenue Secretary Tarun Bajaj said, while speaking to CNBC-TV18 on November 29.

"As the prices come down, the windfall taxes will either reduce or go away," Bajaj told the news channel.

Crude oil prices had sharply soared from March to May after Russia’s invasion of Ukraine, and the subsequent supply cut imposed by the Organisation of the Petroleum Exporting Countries. Currently, the per barrel prices are hovering below the $90-per-barrel mark in the global market, which is relatively lower as compared to $120 clocked in May.

"As a policymaker at North Block, I will say windfall gains tax going is good for the economy," Bajaj said.

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Windfall tax or the special additional excise duty (SAED) on crude petroleum exports was introduced by the government on July 1 to charge the industry for the large profit it has been earning through the sale of refined crude in the international market. Its quantum is reviewed at every fortnight.

On November 16, at the ninth fortnightly review of  SAED, the Centre had raised the tax on domestically produced crude to Rs 10,200 per tonne, from Rs 9,500.

The SAED on export of diesel was, however, slashed to Rs 10.5 per litre, from Rs 13 per litre. The levy on diesel includes Rs 1.50 per litre road infrastructure cess.

The export tax on jet fuel or ATF, which was set at Rs 5 a litre in the previous review on November 1, was not altered.

When the levy was first introduced, a windfall tax on export of petrol alongside diesel and ATF too was levied. But the tax on petrol was scrapped in subsequent fortnightly reviews.

While the windfall profit tax is calculated by taking away any price that producers are getting above a threshold, the levy on fuel exports is based on cracks or margins that refiners earn on overseas shipments. These margins are primarily a difference of international oil price realised and the cost.

(With PTI inputs)